The World Bank, Vietnam's GDP would rise by 7.5% in 2022

DNHN - According to the World Bank's most recent study, Vietnam's economy expanded 5.2% in the fourth quarter of 2021, 5.1% in the first quarter of 2022, and 7.7% in the second quarter as consumers satisfied previously pent-up demand and overseas arrivals rose.

According to a recent World Bank (WB) research, Vietnam's economic recovery has advanced in the last six months due to a resilient manufacturing sector and a significant rebound in service industries.

GDP growth is expected to accelerate from 2.6% in 2021 to 7.5% in 2022, while inflation is expected to rise by 3.8% on average this year.

Vietnam's economy expanded by 5.2% in the fourth quarter of 2021, 5.1% in the first quarter of 2022, and 7.7% in the second quarter as consumers met previously unfulfilled requirements and the number of tourists and foreign visitors increased.

However, the World Bank cautioned that the improved forecast is still contingent on rising risks that jeopardize the prospects for recovery. Risks include sluggish or stagnant growth or inflation in major export markets, prolonged global commodity price shocks, continued disruption to global supply networks, and the emergence of new COVID-19 strains.

Domestic issues include labour shortages, growing inflation threats, and increased banking sector vulnerabilities.

Because the domestic recovery process has only recently begun, the outlook for global demand is deteriorating, and inflation risks are rising, the World Bank urges that policymakers act quickly.

In the short term, fiscal policy should be focused on executing the policy package to assist economic recovery and development, while also increasing the targeted social safety net to enable poor and vulnerable people to endure the effect of gasoline price shocks and rising inflation.

It is proposed that the banking industry closely monitor and tighten reporting and provision for bad loans, as well as establish a procedure to deal with insolvency.

Notably, the World Bank study warns that if the possibility of higher inflation becomes a reality when core inflation accelerates and the consumer price index surpasses the Government's objective of 4%, the Bank will intervene. To combat inflationary pressures, the Vietnamese government should be prepared to turn to monetary tightening by hiking interest rates and tightening the money supply.

PV