Vietnam’s economic growth set for 2022 breakthroughs

Vietnam’s GDP grew 5.22 percent in the fourth quarter of 2021 and 2.58 percent in the whole year. Although it was much lower than the set target, economists say the 2021 GDP growth rate was a satisfactory result in the context of Covid-19 complications, which would pave the way for the Vietnamese economy to recover quickly in 2022 and the ensuing years.

Vietnam continues accelerating mass Covid-19 vaccinations

According to Nguyen Thi Huong, Head of the General Statistics Office of Vietnam under the Ministry of Planning and Investment, Vietnam was one of the few world economies to maintain positive growth in 2020 and 2021. Dr. Le Dang Doanh, former head of the Central Institute for Economic Management (CIEM), said Vietnam achieved the 2.58 percent GDP growth rate under very difficult circumstances due to the Covid-19 directly affecting economic centers and major manufacturing hubs such as Ho Chi Minh City, Binh Duong, Bac Ninh and Bac Giang provinces, disrupting supply chains. He said the fact that Vietnam nonetheless maintained positive economic growth is admirable.

There were many bright points in the 2021 picture of the Vietnamese economy. Foreign trade value reached a new record level, nearly US$670 billion, almost 23 percent higher compared with 2020. The export value exceeded US$336 billion, up 19 percent, marking 2021 as the sixth consecutive year of Vietnam’s trade surplus with the surplus reaching about US$4 billion. Vietnam has joined the world’s top 20 economies in terms of international trade.

Investor trust

Foreign direct investment (FDI) also added a bright point to the 2021 picture of the Vietnamese economy, with total amount of newly registered capital, increases in capital of ongoing projects and stock purchases reaching US$31.15 billion, up 9.2 percent compared with 2020. Major groups of global reputation, such as LG (Republic of Korea), LEGO (Denmark), and Amkor Technology (USA), have increased their investment in Vietnam.

Nguyen Thi Huong said increased FDI in Vietnam in 2021 reflected foreign investors’ trust in and expectations from the Vietnamese investment and business environment. The acceleration of Covid-19 vaccinations is another factor expected to drive Vietnam’s economic growth in 2022. With 110 million shots given in the fourth quarter of 2021, Vietnam has become one of the world’s top 10 countries in terms of Covid-19 vaccination progress. This will protect the Vietnamese economy against new variants of the coronavirus.

“Given these positive signals, I believe Vietnam can achieve the 6-6.5 target set for GDP growth in 2022,” Nguyen Thi Huong says.

However, economists are also pointing to factors that could negatively affect Vietnam’s economic growth in 2022. These include the continued Covid-19 pandemic with the occurrence of new variants and the forecast of a continued rise of production material costs affecting production and trade.

In order to make the most of growth opportunities, Vietnam needs to control the pandemic and improve the supply-demand balance. Third doses of Covid-19 vaccine are being given to people above the age of 18 and second doses for those aged from 12-17. The government has provided support for businesses to recover production and export, while at the same time stimulating domestic consumption in order to motivate economic growth. These efforts will lay the foundation for the Vietnamese economy to make breakthroughs in 2022.