Vietnam’s economic recovery is likely to accelerate in 2022, as gross domestic product (GDP) growth is expected to rise to 5.5 percent from 2.6 percent the previous year, the World Bank said in the country’s new economic update.
Assuming that the Covid-19 pandemic will be brought under control both domestically and globally at some point given the milder variants of Omicron, the forecast expects Vietnam’s services sector to gradually grow as consumer and investor confidence is expected to increase recovery.
Manufacturing, in turn, will benefit from steady demand from the US, EU and China. Fiscal deficits and debt are expected to remain sustainable, with the debt-to-GDP ratio projected at 58.8%, well below the statutory limit, the report said.
Improving environmental issues in trade is paramount
The World Bank’s forecast also addresses environmental issues. It noted that while Vietnam has begun to decarbonize trade-related activities, more needs to be done to address growing pressure from key destination markets, trading partners and multinational corporations for green products and services.
“Trade will be a key component of Vietnam’s climate action in the coming years,” said Carolyn Turk, World Bank country director for Vietnam.
She added: “Promoting green trade will not only help Vietnam meet its commitment to achieve net-zero emissions by 2050, it will also help maintain its competitive edge in international markets and ensure trade remains an important source of income and employment. Creator.”
Investigate potential downside risks if the Covid-19 crisis persists
However, the outlook also takes into account serious downside risks, especially the unknown course of the pandemic. The outbreak of new variants could prompt new social distancing measures, dampening economic activity, while weaker-than-expected domestic demand in Vietnam could hamper the recovery.
In addition, many trading partners face shrinking fiscal and monetary space, which, if the crisis persists, could limit their ability to further support the economy, which in turn could slow the global recovery and weaken demand for Vietnamese exports.
Focus on fiscal policy and social measures
A cautious policy response could mitigate these risks, World Bank economists said. They noted that fiscal policy measures, including a temporary reduction in the value-added tax rate and increased spending on health and education, are likely to support aggregate domestic demand.
Furthermore, if the crisis persists, support for affected businesses and citizens should be more substantive and targeted. This should include social protection programmes to address the severe and uneven social consequences of the pandemic. High risks in the financial sector should also be closely monitored and proactively addressed, they added.
Covid-19 billboard in Hanoi Vietnam’s economic recovery is likely to accelerate in 2022, as gross domestic product (GDP) growth is expected to rise to 5.5 percent from 2.6 percent the previous year, the World Bank said in the country’s new economic update. Assuming that the Covid-19 pandemic will be brought under control both domestically and globally at some point given the milder variants of Omicron, the forecast expects Vietnam’s services sector to gradually grow as consumer and investor confidence is expected to increase recovery. manufacture…
Vietnam’s economic recovery is likely to accelerate in 2022, as gross domestic product (GDP) growth is expected to rise to 5.5 percent from 2.6 percent the previous year, the World Bank said in the country’s new economic update.
Assuming that the Covid-19 pandemic will be brought under control both domestically and globally at some point given the milder variants of Omicron, the forecast expects Vietnam’s services sector to gradually grow as consumer and investor confidence is expected to increase recovery.
Manufacturing, in turn, will benefit from steady demand from the US, EU and China. Fiscal deficits and debt are expected to remain sustainable, with the debt-to-GDP ratio projected at 58.8%, well below the statutory limit, the report said.
Improving environmental issues in trade is paramount
The World Bank’s forecast also addresses environmental issues. It noted that while Vietnam has begun to decarbonize trade-related activities, more needs to be done to address growing pressure from key destination markets, trading partners and multinational corporations for green products and services.
“Trade will be a key component of Vietnam’s climate action in the coming years,” said Carolyn Turk, World Bank country director for Vietnam.
She added: “Promoting green trade will not only help Vietnam meet its commitment to achieve net-zero emissions by 2050, it will also help maintain its competitive edge in international markets and ensure trade remains an important source of income and employment. Creator.”
Investigate potential downside risks if the Covid-19 crisis persists
However, the outlook also takes into account serious downside risks, especially the unknown course of the pandemic. The outbreak of new variants could prompt new social distancing measures, dampening economic activity, while weaker-than-expected domestic demand in Vietnam could hamper the recovery.
In addition, many trading partners face shrinking fiscal and monetary space, which, if the crisis persists, could limit their ability to further support the economy, which in turn could slow the global recovery and weaken demand for Vietnamese exports.
Focus on fiscal policy and social measures
A cautious policy response could mitigate these risks, World Bank economists said. They noted that fiscal policy measures, including a temporary reduction in the value-added tax rate and increased spending on health and education, are likely to support aggregate domestic demand.
Furthermore, if the crisis persists, support for affected businesses and citizens should be more substantive and targeted. This should include social protection programmes to address the severe and uneven social consequences of the pandemic. High risks in the financial sector should also be closely monitored and proactively addressed, they added.