Vietnam will record the highest GDP growth in Southeast Asia this year

Le Trung Hieu, deputy director-general of the General Statistics Office, said the agency expects Vietnam’s economy to grow 8% in 2022 despite the not-so-positive economic picture in the last quarter.

The economy grew 8.83% in the first nine months, the highest since 2011-2022, thanks to a 13.67% increase in the third quarter.

Frederic Neumann, co-head of Asian Economic Research at Hong Kong-based HSBC Holdings, said Vietnam is a bright spot amid a gloomy global economy.

Neumann said the global economy was facing high inflation and consumer demand in Europe was falling as a result of high energy prices.

China’s sluggish real estate sector and zero-Covid policy also impacted purchasing power. Although this situation is also impacting Vietnam, the country remains resilient, Neumann said.

Therefore, HSBC estimates Vietnam’s growth at 6.9% in 2022, the highest in Southeast Asia, while the Asian Development Bank (ADB) sticks to its growth forecast of 6.5% for this year.

The World Bank forecasts that Vietnam’s GDP could grow by 7.2% in 2022, the highest in East Asia and the Pacific region. “Vietnam will continue to be the fastest growing economy in Southeast Asia in 2023 and beyond,” said Neumann.

At an event in Ho Chi Minh City last Thursday, EuroCham chairman Alain Cany said Vietnam’s prospects are still quite good.

Brook Taylor, CEO of VinaCapital Asset Management, said Vietnam’s long-term prospects are promising. “We forecast Vietnam to grow 8% this year and 6% over the next ten years.”

However, Vietnam would also be affected by global problems such as high energy prices and material costs.

Cany said consumer goods, textiles and electronics are becoming increasingly expensive due to supply disruptions caused by the Russia-Ukraine crisis and China’s zero-Covid restrictions.

“Vietnam may struggle to import raw materials if China maintains its widespread lockdown, as 55% of Vietnam’s imported materials and accessories come from the country,” he noted.

Meanwhile, Vietnam’s exports could be affected due to lower demand in the European, American and Chinese markets, HSBC’s Neumann said.

The Vietnamese stock market has not performed well lately. According to Brook Taylor, CEO of VinaCapital Asset Management, the market is down 23% year-to-date, fueling conflicting investor sentiment. Some investors will seek profits from other emerging markets or the US if the Fed hikes interest rates.

To curb runaway inflation, the Fed raised interest rates by 0.75 percentage points on September 21, the third such hike, bringing the Fed interest rate to between 3% and 3.25%.

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