According to the World Bank (WB), international tourism to Vietnam is expected to recover gradually from mid-2022.
At the online press conference to launch the East Asia and Pacific Economic Situation Update Report April 2022 of the World Bank (WB) on April 5, Mr. Aaditya Mattoo, Chief Economist, In the East Asia and Pacific region, Vietnam’s economy is forecast to grow by 5.3% in 2022.
Mr. Aaditya Mattoo, Chief Economist, East Asia and Pacific Region, said that Vietnam’s economy is forecast to grow by 5.3% in 2022 – Screenshot
The above forecast is based on the policy of living with Covid-19, the solid results of the export-oriented manufacturing and processing industry and the recovery of domestic demand. The poverty rate is expected to decrease in 2022, but at a slower rate than before the epidemic.
According to the World Bank, over 78% of the population has been fully vaccinated, but the economy still faces negative risks related to emerging strains, the global impact of Russia’s invasion of Ukraine. , rising world commodity prices and slowing growth of key export markets.
Vietnam’s GDP growth is forecast to reach 5.3% in 2022 and then stabilize around 6.5% under the scenario where travel restrictions are eased both at home and abroad. The service sector is expected to recover gradually as consumer confidence is restored andtourismInternational visitors are expected to be gradually restored from mid-2022.
Export turnover of processed and manufactured goods is forecasted to increase at a slower rate as growth in key export markets of Vietnam (such as the US, the European Union and China) slows down. .
However, this outlook also faces increasing negative risks. Slowing growth in key trading partners coupled with a trade rate shock due to the Russia-Ukraine conflict and related sanctions could affect the recovery. These factors could be exacerbated if a new strain of Covid-19 arises.
Economic recovery also depends on the speed of recovery of domestic private demand, which is still relatively slow, showing the cautious sentiment of consumers and investors.
The current phase of strong infections could lead to temporary disruptions in labor supply and production. Since the economy has recovered strongly since the beginning of the year, if the government deploys a strong support package with fiscal policy, the impact on economic growth can be mitigated. Monetary policy still needs to loosen, but must continue to be cautious to control risks in the financial sector. According to the World Bank, the case of additional shocks could lead to a bad scenario, whereby GDP growth will only reach 4% in 2022, recovering to 6% and 6.5% in 2023 and 6.5%, respectively. 2024.
Poverty is expected to fall in 2022, assuming GDP growth recovers to pre-pandemic levels, but the impact of the crisis will have a lasting effect on increasing inequality. Rising inequality can have human capital and economic consequences for the country. “Sold properties will not be able to generate future income while the unequal quality and disruption of education during the Covid-19 crisis will have positive consequences. human capital accumulation and lifetime income potential,” the World Bank report recommends.
According to WB Chief Economist, East Asia and Pacific Region, Mr. Aaditya Mattoo, Vietnam is one of the WB economies that has sharply reduced its economic growth forecast, from a growth forecast of 6.5% in October 2021 decreased to 5.3% (with a bad scenario of 4%).
“The WB lowered its growth forecast due to the difficulties Vietnam is facing when dealing with the Omicron mutation, the high number of new infections. Besides, Vietnam’s oil imports are up to 3% of GDP. Vietnam is one of countries that are very successful when participating in global value chains, taking advantage of opportunities in expanding global trade and increasing openness to the global economy, but this will also make Vietnam vulnerable. than before the shocks from outside “- Mr. Aaditya Mattoo analyzed.
According to this expert, Vietnam will have to be more successful in building social security systems. At the same time, it needs to be extra cautious when looking at its financial systems. Countries in the region will need to carefully study support measures in the financial sector such as: Preferential measures, relaxation, interest rate reduction, debt restructuring but not debt grouping… Measures The legal framework of the banking and financial system introduced by Vietnam needs to be carefully studied.
“Measures to date to go further and higher in the global value chain, but now it is necessary to make Vietnam’s participation in the global value chain more sophisticated and advanced” – Economist World Bank chief recommended.
Vietnam has been very successful in attracting foreign direct investment for many years, improving its position in global value chains, which has helped Vietnam achieve good growth rates and good poverty reduction. “If I have advice for you, it is necessary to find a way to develop the service industry in depth. The service industry is of great importance and we must increase labor productivity in the service industry to thereby creating the impetus for increasing productivity in both the service sector and the business sector.To do that, all services are needed such as the transportation system, financial and accounting services, and insurance. … all have to be better. All these stages need to be improved. Vietnam is currently lagging behind in digital transformation, which is also an aspect that needs attention to develop more”- Mr. note.