Australia supports Economic Reform in Vietnam (Aus4Reform)

15/7/2022

CIEM: Vietnam's economic growth in 2022 is likely to reach 6.9%

Based on the analysis of the domestic and international socio-economic situation, the CIEM research team believes that Vietnam's economic growth in 2022 can reach 6.7-6.9%.

CIEM: Vietnam's economic growth in 2022 is likely to reach 6.9%

Based on the analysis of the domestic and international socio-economic situation, the CIEM research team believes that Vietnam's economic growth in 2022 can reach 6.7-6.9%.

On the morning of July 15, with the support of Australian Program Supporting Vietnam’s economic reform (Aus4Reform), The Central Institute for Economic Management held a seminar to announce the report “Vietnam’s economy in the first 6 months of 2022: Reform and sustainable development“.

The first 6 months of 2022: Vietnam’s economy recovers positively

According to Dr. Tran Thi Hong Minh, Director of CIEM, the first 6 months of 2022 have witnessed a series of important moves by key economies, paving the way for a series of new trends that have far-reaching and lasting effects on the economy. world economy.

Dr. Tran Thi Hong Minh, Director of CIEM speaking at the Workshop.
Dr. Tran Thi Hong Minh, Director of CIEM speaking at the Workshop.

The protracted Russian-Ukrainian conflict affects the supply chains of many basic goods, and at the same time leads to the trend of confrontation-retaliatory alliances between the superpowers. The US has begun a period of “normalizing” interest rates in response to high inflation. The Regional Comprehensive Economic Partnership (RCEP) has come into effect, thereby linking East Asian economies to the region’s broad-based export recovery.

The above factors all have implications for maintaining economic-social stability and reform, while promoting economic recovery, overcoming the difficult situation that persisted in previous years – related to new corona virus variants, US-China strategic confrontation, digital transformation, green recovery, and the demand for reform of multilateral institutions.

From the beginning of 2022, the Government of Vietnam continues to implement the approach of “safe adaptation, flexibility, effective control of the COVID-19 epidemic”. Along with the good control of the COVID-19 epidemic, the vaccine coverage rate improved and the number of infections continued to decrease, restrictions on entry and exit were gradually lifted. Vietnam has implemented many policies to promote socio-economic recovery and development, and emphasizes priority on stabilizing the macro-economy and controlling inflation. The Government and ministries continue to propose and focus on implementing drastic measures to promote disbursement of public investment. Supporting workers and disadvantaged groups in society is also an important priority to reduce difficulties and facilitate the process of adapting to the new working context.

“Statistics have shown a positive recovery momentum of Vietnam’s economy. GDP growth rate reached 5.03% in the first quarter of 2022 and 7.72% in the second quarter of 2022, achieving a similar growth rate. relatively high compared to Asia. The growth recovery momentum is clearly shown in all three regions, especially services,” said Ms. Minh.

In the field of labor and employment, thanks to timely solutions and policies to support production and business activities, and to support employees, the labor-employment situation has soon had positive changes. . The labor force aged 15 and over in the second quarter of 2022 reached 51.6 million people, an increase of nearly 0.6 million people compared to the same period last year.

According to the Nikkei Recovery Index, Vietnam has continuously improved its ranking and was most recently ranked in second place. This review is positive and substantive.

An important part of these achievements is thanks to a methodical approach to maintaining macroeconomic stability, ensuring major balances, while maintaining the momentum of reform, creating space for business activities. economy of businesses and people. More deeply, it is thanks to the thinking towards ensuring the harmony of macroeconomic stability and social stability, on the basis of seamless and far-reaching economic institutional reform”, Ms. Minh said.

2 scenarios to update Vietnam’s economic forecast in 2022

According to CIEM’s research team, Vietnam’s economic outlook in the second half of 2022 may be influenced by five factors including: (1) The ability to control the spread of COVID-19 variants and epidemics new; (2) The progress of the implementation of tasks in the Socio-economic Development and Recovery Program; (3) Maintaining macroeconomic stability is still an important foundation, to help stabilize market sentiment and “anchor” inflation expectations; (4) The ability to diversify export markets, associated with taking advantage of opportunities from FTAs ​​and dealing with risks associated with trade-technology confrontation between superpowers, and the downward trend of currencies regional currency against USD…; (5) The ability to create more opportunities and skills for female workers, thereby helping to take advantage of the potential of this group of workers, especially in rural areas.

At the workshop, CIEM’s research team proposed two scenarios to update Vietnam’s economic forecast in 2022.

In Scenario 1, the epidemic situation in the world and Vietnam is generally under control, the countries maintain the trend of facilitating people’s movement. World GDP will grow by 2.9% in 2022. US prices will increase by 7.682%. The price of agricultural products for export increased by 17.7%. World crude oil prices increased by 42.0%. On the Vietnamese side, the VND/USD exchange rate of commercial banks increased by 2.5%. Total means of payment increased by about 8.5%. Credit increased 14.0%. Import prices of goods increased by 8.5%. The population increases by 1.07%, and the number of employed workers increases by 6.1% compared to 2021. The volume of crude oil exports is assumed to increase by 10.7% compared to 2021. The real effective exchange rate is assumed to decrease. 1.5%. On the balance of payments, government and private (net) transfers both fell 5%. Realized capital of the FDI sector (including both foreign and Vietnamese side) increased by 8.9%. Investment disbursement from the state budget is 460.8 trillion dong.

Scenario 2 keeping most of the assumptions as in Scenario 1, only adjusting: (i) world GDP to increase by 3.6%; (ii) total means of payment increased by 10.5%; (iii) credit increased by 15%; (iv) the import price of goods increased by 5%; (v) VND/USD exchange rate of commercial banks increased by 2.0%; (vi) hypothetical real effective exchange rate of 0.8%; (vii) investment disbursement from the state budget at 542.16 trillion dong; and (viii) promote facilitation for new economic models (digital economy, circular economy…).

 

The forecast results show that economic growth in 2022 can reach 6.7% in Scenario 1 and 6.9% in Scenario 2. Full-year exports are forecast to increase by 15.8% in Scenario 1. and 16.3% increase in Scenario 2. Trade surplus is forecast at $1.2 billion and $2.5 billion, respectively. Average inflation in 2022 is forecast at 4.0% and 3.7%, respectively.

Workshop document: Presentation of Mr. Nguyen Anh Duong, Head of General Research Department, CIEM