DBS predicts Vietnam's GDP growth may reach 8% in 2022

In a report released on October 4, DBS said FDI will remain a key engine of Vietnam’s growth over the coming years. Newly registered FDI remained resilient in the first three quarters of 2021, despite the challenges and difficulties faced by international companies during the virus outbreak since April 2021.

It noted that Vietnam has suffered heavily from the pandemic in 2021. Having done well with virus management in 2020, the economy shrank significantly in the third quarter of 2021 by 6.17 per cent year on year.

The multi-decade decline in the third quarter makes it difficult for growth to recapture last year’s 2.9 per cent expansion, much less than the government’s official GDP target range of 6-6.5 per cent, a report in a Vietnamese English-language daily said.

Therefore, the DBS lowered its 2021 growth forecast to 1.8 per cent from 5 per cent previously. With demand-pull pressures also muted through 2021, consumer price index inflation is likely to average lower at 2.1 per cent from 3.3 per cent previously.

“Looking into the fourth quarter of 2021 and 2022, we expect a better outlook, as the economy enters a ‘new normal’, helped by the vaccination roll out. Favourable base effects and structural growth drivers such as FDI and exports, coupled with digitalisation impetus, are likely to propel growth to 8 percent in 2022 (vs 6.8 percent previously)”, the DBS report said.

“We expect retail and recreation mobility to improve further amid looser curbs and greater adaptation towards ‘living with the virus’. Retail sales and ‘accommodation and food services’, which saw significant double-digit contractions in the third quarter, are therefore likely to concomitantly rebound and recover into 2022,” stated Chua.

The report also highlighted Vietnam’s increasing digitalisation in the ‘new normal’ situation. The pandemic has notably accelerated digitalisation and increased technological adoption, which is a constructive trend, it said.

Chua said greater attainment of technical and digital skills, and a higher-skilled workforce over the coming years should not only help to increase productivity but also provide a positive feed-back loop to enable Vietnam to move up the manufacturing value chain and further attracting FDI.

Fibre2Fashion News Desk (DS)