After a strong performance in 2022, Vietnam’s economic growth is expected to moderate at 6.5% this year and further expand at 6.8% in 2024, according to the Asian Development Outlook (ADO) recently released by the Asian Development Bank (ADB).
Vietnam’s economic growth will be constrained in 2023 by the global economic slowdown, continued monetary tightening in advanced economies, and spillover from global geopolitical tensions, said ADB Country Director for Vietnam Andrew Jeffries.
Public investment will be another key driver for economic recovery and growth in 2023 and 2024, according to Principal Country Economist for Vietnam Nguyen Minh Cuong. He said Vietnam can still achieve its growth target if it implements three key breakthroughs.
"First, Vietnam plans to disburse nearly 30 billion USD of public investment this year, which can contribute 1% to GDP growth. Second, Vietnam will shift its policy, from tightening inflation control to supporting growth. Vietnam is also taking advantage of the reopening of China whose key sectors — industry, construction, and services — are experiencing strong growth," said Cuong.
The ADB forecast that on the demand side, domestic consumption will continue to rebound in 2023. Revived tourism, new public investment and stimulus programmes initiated in January 2022, and a salary increase effective in July 2023 are expected to keep domestic consumption on the rise, though higher inflation may hamper its recovery.
Weakening global demand will continue to dampen trade in 2023. Exports in the first two months of 2023 decreased by 10.4% year on year, while imports dropped by 16%, it said.
Both imports and exports are forecast to shrink by 7% this year and next. Slowing trade could create a current account deficit that equals 1% of GDP this year before moving back into surplus in 2024.
