HCMC – The World Bank has revised its forecast for Vietnam’s gross domestic product (GDP) growth this year to 5.3% from the 5.5% predicted early this year, based on Vietnam’s policies to cope with Covid-19, the manufacturing and processing sector’s performance and the domestic demand.
On April 5, the WB held an online press briefing to introduce its “Braving the Storms – East Asia and Pacific Economic Update” report, which also includes the global lender’s assessment of Vietnam’s economy.
Aaditya Mattoo, chief economist for the East Asia and Pacific Region of the WB, said Vietnam was among the economies that the WB had significantly revised down its economic growth forecast.
The new forecast was much lower than the 6.5% forecast in October last year. However, under the worst scenario, the WB forecast Vietnam’s GDP growth at 4% this year, 6% in 2023 and 6.5% in 2024.
The WB revised down its forecast for Vietnam’s GDP growth due to the difficulties that the country has been facing amid the increasing Covid cases and the vulnerability to external factors.
Specifically, the oil import value has accounted for up to 3% of the GDP, while the import prices of other materials, such as steel and iron, have increased.
The service sector was expected to gradually recover as consumer confidence returned and the number of foreign arrivals to Vietnam increased from the middle of the year. The export revenue from manufactured and processed products may grow slower due to the slow growth of key markets, such as the United States, the European Union and China.
Nevertheless, the country will still face risks as Vietnam’s key trade partners have seen slower growth with economic sanctions relating to the Russia-Ukraine conflict. These factors may be worse if new Covid-19 variants appear.
In addition, the economic recovery depends on the recovery of the local private demand, which remains slow, proving the cautiousness of consumers and investors.
According to the WB, Vietnam’s economy has recovered strongly since early this year. If the Government drastically implements the stimulus package, the impact of the above factors on the local economic development may be eased.
Financial policies should be relaxed further, but the country should be cautious about controlling risks in the financial sector.