According to data from the General Statistics Office, Vietnam’s GDP growth in 2022 was estimated at 8.02% over the previous year. That was the highest growth from 2011 to 2022. Inflation in the country was under control, and the average CPI increased by 3.15% over 2021, lower than the rate of 3.54% and 3.23% in 2018 and 2020, respectively. Vietnam's production and business activities in all three sectors of the economy quickly recovered, and the number of new businesses entering the market increased.
In its newly released report, HSBC also assessed that 2022 is a year of recovery, helping Vietnam continue to be one of the outstanding growth countries in Asia. However, in the face of growing risks to the world economy, many experts predict that Vietnam's growth prospects in 2023 will be significantly affected.
Andrea Coppola, Chief Economist of the World Bank (WB) in Vietnam, recently said that this is a challenging time for the global economy.
The global economy can fall into recession in 2023, having to cope with negative impacts from the impending risks.
Five main risks that could become reality in the coming months include additional monetary tightening, capital flow pressure on emerging markets, weaker-than-expect economic activities in China, countries reorienting supply chains due to geopolitical tensions, and accelerating global climate change. According to Mr. Coppola, if one or more of these risks materializes, a global recession will likely occur in 2023.
From this assessment, Mr. Coppola commented that the Vietnamese government would have an important, though difficult, task to minimize the impact of that possible scenario on Vietnam’s economy and turn that challenging situation into an opportunity for the country’s economy.
According to HSBC, the biggest risk to Vietnam's growth in 2023 would be the increasing trade difficulties. Vietnam is not immune to the effects of the significant slowdown in global trade. Since the US-China trade tensions, Vietnam has been one of the biggest beneficiaries in terms of trade and foreign investment redirection, especially boosting export market share to the US market. Therefore, Vietnam is more affected when the US economy declines.
Other risks come from upward pressure on energy prices. Although they have fallen from their peak in June, gasoline prices remain high. To reduce the risk of storing fuel imported from abroad, the government has directed domestic refineries and state-owned enterprises to plan to increase energy imports at least for the first 6 months of 2023. HSBC forecasts that the State Bank of Vietnam (SBV) will raise the refinancing interest rate by 50 basis points in the first quarter of 2023 and the second quarter of 2023, raising the refinancing rate to 7.0% by mid-2023.
Several organizations have lowered their growth forecasts for Vietnam due to the potential risks the country is facing. HSBC forecasts that growth in 2023 will slow to 5.8%, lower than the previous forecast of 6%. Similarly, the Asian Development Bank (ADB) also lowered its growth forecast for 2023 to 6.3%, 0.4 percentage points lower than the previous forecast. Andrew Jeffries, ADB Country Director for Vietnam, said that the difficulties in 2023 include monetary tightening, weakening global demand for Vietnamese exports, and irregularities in the bond market.
As for fiscal policy, the main challenge in 2023 will be finding ways to continue to drive economic growth amid inflation. Mr. Andrea Coppola said that managers could simultaneously consider controlling public spending, prioritizing spending on human resource development, and speeding up the implementation of the selected public investment program expected to have the highest impact on economic growth.
Compiled by VietnamCredit
