Vietnam – Leading Country in Economic Growth in ASEAN

Vietnam's national credit rating expert at Moody's Nishad Majmudar said that Vietnam is among the countries with the best performance in ASEAN in terms of economic growth, along with ensuring its financial strength despite experiencing difficult times from internal and external factors.

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Vietnam - Leading Country in Economic Growth in ASEAN
Vietnam socio-economic forum 2022. Photo: quochoi.vn

Assessing Vietnam’s economic development prospects at the Vietnam socio-economic forum 2022, Vietnam’s national credit rating expert at Moody’s Nishad Majmudar said that the Vietnamese economy as well as national exports are becoming stronger despite many economic shocks in the world.

Those shocks include the Covid-19 pandemic, US-China trade tensions, and, most recently, the military conflict between Russia and Ukraine.

However, FDI continued to flow into many industries of Vietnam despite the above events, especially the manufacturing sector. Expert Nishad Majmudar expects that Vietnam’s growth will continue to be positive, even though the world and global finance are experiencing a period of decline.

Besides, he also appreciated the effectiveness of Vietnam’s fiscal policy, especially the Government’s debt management policy.

This includes reducing the proportion of foreign loans, and shifting to domestic commercial loans using Vietnam dong. It also contributes to reducing the total debt pressure on the Government, while reducing the risk of refinancing over time.

Specifically, as Vietnam is moving up the national income ladder, this means that Vietnam will have less access to concessional loans from countries with bilateral or multilateral relations.

Referring to fiscal strength, Expert Nishad Majmudar said, despite the unfavorable events taking place around the world including the Covid-19 pandemic, the Vietnamese government can still maintain a prudent fiscal stance, including maintaining a moderate fiscal deficit as well as a stable debt level.

Compared to other countries in the Asia-Pacific region, Vietnam’s fiscal space is still quite large. Therefore, in the event of unexpected economic shocks, the Government still has room to offer economic stimulus packages.

Vietnam - Leading Country in Economic Growth in ASEAN
Vietnam’s national credit rating expert at Moody’s Nishad Majmudar.

Looking to the future, we can see that there are still many unfavorable events related to the global economic slowdown.

Expert Nishad Majmudar said he is currently re-evaluating the growth for 2022 and 2023 of the US, Chinese and major European economies.

Given that these are Vietnam’s largest export markets, expert Nishad Majmudar believes that Vietnam will be affected to a certain extent, especially in export volume.

However, Vietnam’s domestic market has reopened and tourists have started coming to Vietnam. Therefore, Vietnam’s export deficit can be offset by the service sector and the recovery of the domestic economy. This will support economic growth.

From the above analysis, expert Nishad Majmudar expressed optimism about Vietnam’s economic growth prospects with an increase of 6% to 7% in the medium term compared to other countries in the region.

Vietnam is one of the leading countries in economic growth in the region. However, one of the risks to consider is price and inflationary pressure in the manufacturing sector, when Vietnam still has to import some raw materials for export.

Expert Nishad Majmudar expects that Vietnam will narrow its balance of payments surplus in the next few years as the growth drivers of exports weaken and input material prices rise.

Besides, although FDI inflows into Vietnam are strong, expert Nishad Majmudar expressed his hope that FDI inflows will remain stable in the coming years.

Expert Nishad Majmudar said that Vietnam also needs to carefully calculate its foreign exchange reserves accumulated over many years. It will most likely start to decline over the next few years.

Expert Nishad Majmudar said Vietnam is quite resilient and is among the best-performing countries in ASEAN in terms of economic growth. Vietnam still maintains financial strength despite experiencing many shocks from internal and external factors.

Rosie Nguyen