|Inflation in Vietnam is low by regional standards, but core inflation rose to nearly 4.5% in October. Shoppers at a food market in Hanoi. Photo: AP
In an article by Megha Mandavia, the journal said after the tough years of 2020 and 2021, Vietnam spent much of 2022 in the sweet spot – still-low inflation and rapid growth.
Times will get a bit tougher now, but the country is poised for fast growth next year – Natixis is forecasting 6.5%, while Capital Economics expects more than 7% – and the weakening currency may help soften the blow from weaker export demand.
The article assessed that the situation could get even trickier for Vietnam if the world slides into a recession. However, thanks to investments in infrastructure, aggressive trade liberalisation and relatively cheap wages, its manufacturing engine remains intact.
Vietnam also has the advantage of starting from an enviable growth position: roaring at 13.7% year on year in the third quarter of 2022 on the back of strong exports to the US.
|WB said Vietnam’s GDP grew by 13.7% year-on-year in the third quarter of this year and 8.9% over the first three quarters. Photo: VNA
The author noted that the country has also been partly insulated from the global surge in food prices – it is among the leading rice producers and exporters globally.
Earlier, the World Bank (WB) released a report showing that Vietnam’s GDP grew by 13.7% year-on-year in the third quarter of this year and 8.9% over the first three quarters.
Industrial production and retail sales posted another month of high growth rates (13.0% and 36.1% year-on-year) which could be attributed both to strong economic activities and to the low-base effects.
Both exports and imports growth moderated in September due to weakening demand from major export markets. FDI commitment fell in September, affected by the heighted uncertainty about the global economic prospects while FDI disbursement continued to improve, the report says.
Standard Chartered Bank has raised its Vietnam GDP growth forecast for 2022 to 7.5% from the previous 6.7% and for 2023 to 7.2% from 7.0% to reflect robust Q3 growth of 13.7% year-on-year. The last quarter 2022 growth is anticipated at 4.0%.
|Standard Chartered Bank has raised its Vietnam GDP growth forecast for 2022 to 7.5% from the previous 6.7%. Photo: dautuchungkhoan.vn
Standard Chartered’s economists expect the State Bank of Vietnam (SBV) to continue tightening monetary policy and forecast a 50bps hike in the refinancing rate each in Q4-2022 and Q1-2023, taking the rate to 6%, following a 100bps hike to 5% on September 22.
According to the UK-based lender, the VND is likely to face several headwinds in the short term – a hawkish Fed, strong USD, higher commodity prices and slowing external demand. The VND continues to significantly outperform its peers across EM Asia, despite recent depreciation./.