Economical growth of Vietnam in 2022

Hanoi, The Gulf Observer: Vietnam’s economy this year experienced its highest growth rate in more than a decade at 8.02 percent despite a looming global recession.

According to the General Statistics Office of Vietnam (GSO), this is the biggest rise in the 2011-2022 period.

Manufacturing, construction and processing continued to be major economic drivers at an 8.1 per cent growth rate, contributing 2.09 per cent to national GDP growth and 38.24 per cent to total GDP. The service sector reported a 9.99 per cent sectoral growth, the highest during the period, and 56.65 per cent to total GDP.

Agriculture grew by 2.88 per cent, forestry by 6.13 per cent and aquaculture by 6.13 per cent contributing 0.27 per cent, 0.03 per cent and 0.12 per cent, respectively to national GDP growth.

Retail grew by 10.15 per cent, logistics by 11.93 per cent, hospitality by 40.61 per cent, banking and insurance by 9.03 per cent.

Successful attempts by the government during the last quarter of 2022 to check price hikes of foodstuff, fuel, energy, medicine and education tuition managed to keep inflation down under the 4 per cent target set by the National Assembly (NA).

In the report released yesterday, the GSO said Vietnam’s CPI during Q4 2022 increased by 4.55 per cent compared to the same period last year, resulting in a year-on-year increase of 3.15 per cent. A major contributing factor was the declining global oil prices which have brought down fuel prices in the domestic market.

However, according to the GSO, the global oil price was still volatile and will likely have a significant impact on domestic fuel prices in the coming years.

During 2022, domestic fuel prices have adjusted a total of 34 times, resulting in an overall increase of 28 per cent compared to the beginning of the year. This, however, was still lower than the global and regional average increase.

Another key factor was the country’s ability to increase the supply of key foodstuffs. For example, the price of pork has fallen by 10.58 per cent compared to the same period last year.

Nguyen Thu Oanh, head of GSO’s statistics collection department, said: “In addition, the prices of vital services such as medicine and tuition fees, which were under the government’s discretion, have not increased. On the contrary, many local governments across the country decreased or waived tuition for students.”

Meanwhile, electricity prices have remained the same since the last increase in 2021 despite rising input costs, she added.

Asked about inflation control in 2023, Oanh said the pressure will likely remain high which is reflected in the NA’s target for 2023 to keep inflation under 4.5 per cent, half a percentage point higher than in 2022.

China’s new COVID-19 policy, which likely drives up demand for goods and raw materials, rises in prices for medicine and tuition fee, and basic wage increases are also factors to watch out for in 2023.

The government’s preemptive cuts on the environmental tax on fuel will likely relieve some pressure off inflation.

Nguyen Thi Huong, head of the GSO, said achieving a 6.5 per cent growth rate in 2023 will prove to be a challenging goal in an interview with the Vietnam News Agency (VNA).

Manufacturing and processing have seen fewer orders compared to the same period last year due to decreased demand on the global market with a number of industries not making a full recovery after the pandemic. There was a large number of businesses that have gone under, 19.5 per cent higher compared to 2021.

However, there were highlights including a recovery in the tourism industry as Việt Nam was among the first to reopen to international visitors, coupled with strong initiatives by the industry to promote domestic tourism during the pandemic.

Major free trade agreements including the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the European Union–Vietnam Free Trade Agreement (EVFTA) have played a key part in helping Vietnamese exporters to access new markets, mitigating damage caused by the pandemic.

There have also been improvements in the labour market with lower employment numbers compared to 2021. As global demand was still struggling to bounce back, job creation and employment could fall for a short while but in the long term, the market will make a full recovery and likely continue with a strong growth trajectory.