Vietnam 2022 – Economic recoveryafter the COVID-19 pandemic

DNHN - In the context that the world is forecasted to have many fluctuations, especially the complicated developments of the COVID-19 pandemic, global GDP growth in 2022 is forecasted at 4.5-5%, global inflation is about 3.3%; Vietnam's socio-economic development goals in 2022 is to continue to focus on preventing, fighting disease effectively, ensuring the safety of people's health and lives; recovering and developing socio-economic in a new normal state.

Mr.Trung Hieu, Director of the Department of National Accounts System, General Statistics Office: 8 factors of economic growth in 2022

The year 2022 is a year of great significance, creating a foundation for the implementation of the goals of the five-year socio-economic development plan 2021-2025. Forecasting the international and domestic situation, difficulties and challenges still prevail over advantages and opportunities. The GDP growth target in 2022 from 6.0-6.5% has been determined in the resolution of the National Assembly, this is quite a high target in the context of 2022 that the COVID-19 pandemic may not end completely. Mutations like Omicron may affect service industries and markets inevitably even when they have switched to a new operating state, adapting to the general context. Therefore, economic growth in 2022 can be forecasted based on the following industries, sectors and the following factors and driving forces:

Vietnam's economy continues to inherit the results achieved from the implementation of the 10-year socio-economic development strategy 2011-2020 and improves thanks to the push from FDI enterprises; The macro-economy and major balances of the economy are still basically stable, creating a premise for more flexible and effective management of fiscal and monetary policy. 

In the fields of production and business activities, the agriculture, forestry and seafood sectors will certainly continue to be the backbone of the economy and will continue to promote this role to support the economic recovery. The manufacturing and processing industry in 2022 will be more prosperous; some service industries such as finance, banking, insurance; post and telecommunication; science and technology; healthcare continues to be the industries that maintain good growth rates.

Domestic demand will recover and increase gradually byachievingthe vaccine nation rate with 2 doses of vaccine, ensuring that consumers can participate in the safer shopping market. In addition, the outlook for domestic consumption is forecasted to be brighter, supported by an increase in income and employment expansion when workers return to factories, industrial parks after temporarily avoiding the pandemic;

Recent amendments to the Law on Public Investment help improve public investment by speeding up processes, simplifying procedures and facilitating faster disbursement of public investment;

In the context of the pandemic, many industries and fields have turned to the application of supporting information technology, taking advantage of opportunities from the industrial revolution 4.0, thereby creating new forms of production and business activities with technology integration to achieve higher productivity, quality and efficiency;

Institutional reform of the economy will be effective; economic stimulus packages, economic packages to support production and businessmay help this area gradually stabilize and develop production;

The recent Free Trade Agreement with the European Union and the Comprehensive and Progressive Agreement for Trans-Pacific Partnership promise to open up market access for greater trade and investment activities;

Foreign direct investment inflows are forecasted to maintain and expand for more than 2 years from 2020 to 2021; International tourism activities will prosper when Vietnam reopens international commercial routshortlyure.

Mr Can Van Luc - Chief Economist of BIDV: Risks in the coming year

We need to identify huge opportunities from the international market in the coming year. The international market next year is forecasted to recover at a relatively positive level. This year the world economy is forecasted to grow 5.6-5.9%, next year 4-5%. That is a relatively high level compared to previous years. And next year's inflation is forecasted to slow down to about 3.2 - 3.3%.

The world in 2022 poses four huge challenges for us: Firstly, the end of thepandemic is unknown, while the vaccine progress may be interrupted due to uneven distribution, which is why the country's economic recovery is also uneven. Second, China's growth has been slowing down due to the beginning of structural adjustment, focusing more on quality issues rather than quantity, controlling the real estate market and financial risks. Third, the geopolitical issue is complicated, conflict between major countries will affect the financial, monetary and commodity markets, inflation in the world remains a highthreatto central banks to gradually tighten the support packages recently and start to raise interest rates, so the global money market will be less liquid. And finally, how to international cooperation in the time of disease prevention and economic opening.

Assoc., PhD. Tran Kim Chung - former Deputy Director of the Central Institute for Economic Management: Scenarios of the real estate market in 2022

Positive scenario: Assuming COVID-19 is contained; the third (and even fourth…) vaccine dose is actively deployed; besides, the economy reopen several of necessary mechanisms and policies are waiting (condotel-official; land use corridor for infrastructure works put into auction for construction according to planning, creating capital for infrastructure development; re-mortgage system; mutual savings fund system...), with land and real estate issued; world and regional economic stability; Real estate bonds and land auctions, allocated real estate is well managed… the real estate market in 2022 and the period 2022-2025 will enter a new development cycle. This is the expected scenario, but the feasibility requires the efforts and participation of many stakeholders and there are factors of uncertainty. 

Negative scenario: The COVID-19 pandemic develops complicatedly; the economy did not perform as expected; policies on land and real estate have not changed positively; the world’s economy and the region have complicated developments; macroeconomic difficulties; if one or a few conditional factors appear, the real estate market may face difficult movements. This is an undesirable, low probability, but likely scenario.

Neutral scenario: A scenario somewhere between positive and negative is possible. The variation of this scenario lies in more or fewer impact conditions occur. However, the uncertainty factor about COVID-19 in 2022 is considered to have a strong impact on the real estate market. In the current context and trend, the real estate market will develop in a positive direction.

Everest Securities Corporation (EVS): The stock market is optimistic, VN-Index may surpass 1,660 points

Everest believes ththatwith the provision for earnings per share (EPS) of listed companies growing by 22% and the price-to-earning (P/E) of about 16 times, the VN-Index in 2022 could reach 1,663 points, representing an 11% increase from the closing level at the end of 2021.

The stock market in 2022 will still be optimistic thanks to the following factors: Good disease control helps the market maintain optimism about the economy; Fiscal support packages, the stimulus package for business recovery are launched; Effective international trade agreements combine to promote public investment to catch up with the shifting wave of foreign manufacturing enterprises; The wave of individual investors participating in the stock market is not only a phenomenon but a long-term trend, supporting liquidity and helping the index conquer new peaks.

Regarding the industry outlook and potential stocks in 2022. With the banking industry, profit growth will continue to be maintained at a good level. Credit growth is expected to reach 12% - 14% due to the increased demand for loans for production and business activities, and at the same time, the demand for home loans continues to increase. The group of banks with a high capital adequacy ratio and good asset quality will continue to be granted more credit lines higher than the industry average. However, the NIM of banks in the industry will have a divergence in 2022 as deposit rates tend to increase thanks to sustained credit growth and inflation may increase in 2022, while lending rates are under downward pressure to support customers affected by COVID-19. Banks with high Current Account Savings Account (CASA) and low LDR will have a great advantage to improve NIM in 2022. Non-interest income will continue to be promising thanks to the Bancassurance segment, which has plenty of room for growth. Penetration rate and average premium remained low, promising to continue to contribute 10 - 12% to the proportion of banks' revenue. In addition, banks with separate stories such as raising capital to ensure Basel II compliance, "making a relationship" with strategic investors, divesting subsidiaries, re-signing insurance distribution contracts monopoly… is expected to attract smart money flow in the market.

Despite facing the pandemic lenge, but Everest assessed, banks with good asset quality will not face much pressure on provisioning. Some prominent stocks in the industry recommended by this company are VCB, TCB, MSB.

With the industrial park real estate industry, the continuous flow of FDI to Vietnam along with the Government's changes in pandemic prevention and control increased investment in infrastructure development in key projects such as Trung Luong - My Thuan expressway, Van Don - Mong Cai expressway connecting central cities with ecocentresenters of Hanoi and Ho Chi Minh, promote the development of industrial park real estate industry. In which, companies with land funds to exploit and lease in the next 3 years will stand out in the industry's growth trend. Some outstanding stocks recommended by Everest include SZC, BCM, KBC.

For the retail industry, Everest believes that 2022 will be the year of "recovery and transformation". The retail sector has been severely affected in 2021 by social distancing measures. However, many businesses have actively changed and adapted by applying technology to their business models with the move to encroach on e-commerce. Along with the Government's drastic promotion of the vaccination campaign, the expectation that there will be no more social distancing in 2022 will be a premise for the retail industry to recover. Some prominent stocks recommended in this industry include: MWG, PNJ, PET.

MSc. Luu Anh Nguyet - Institute of Financial Strategy and Policy: Prospects and Challenges for Cryptocurrency

Many predictions about the value of Bitcoin approaching the price of 100,000 USD have been made by experts in the cryptocurrency world. However, many countries still issue warnings about the worthlessness of Bitcoin and other cryptocurrencies. In mid-December 2021, a representative of the Bank of England predicted that Bitcoin and other cryptocurrencies "will be worthless" and investors should prepare to lose everything.

The cryptocurrency market remains a high-risk market and is increasingly influencing traditional financial asset markets. According to data from BTC.com, from January 9, 2009, to December 13, 2021, 18.89 million of the total 21 million Bitcoins were mined, or 90% of the supply. According to calculations, with the increasing hash rate, it will not be until 2140 that the community will fully exploit the remaining 10%. The above numbers show that the scarcity of Bitcoin will cause investors to rush to invest, fear of missing out (FOMO) may be raised to a whole new level. The supply shock will increase dramatically and create a lot of impact on the cryptocurrency and traditional currency markets. According to BTC assessment, the quantum and supercomputer goals that countries are pursuing can also threaten the safety and security of the Bitcoin network in the future.

Practices of the countries within the scope of the study show that, whether admitting or not recognizing the legality of cryptocurrency, banning or allowing transactions related to cryptocurrency, transactions related to cryptocurrency are still performed and growing constantly, becoming more popular and known by more people. The inevitable existence of cryptocurrency and related transactions requires the law to have clear legal provisions for them.

Clear legal regulations for cryptocurrency are an important basis for the issuance of financial-monetary policies for cryptocurrency. Whetherecognisedng as assets, means of payment or not, the law also needs to have a clear legal mechanism to help people, investors and the market be aware of activities related to cryptocurrency. The experience of European countries, Japan, Singapore, etc. shows the prompt and timely promulgation of legal documents, clearly demonstrating the state's management stance towards cryptocurrency and its activities. Activities and related transactions have helped these countries ensure the stability of the financial system, increase revenue for the state budget, and at the same time attract potential technology businesses. According to the IMF, national regulators should strengthen international cooperation to have common rules globally, strengthen cross-border surveillance, and as this is a new area, promote data standardization.

In Vietnam, representatives of the State Bank have repeatedly broadcast the message: Bitcoin and other similar virtual currencies are not legal currency and payment methods in Vietnam. Issuing, providing, using Bitcoin and other similar cryptocurrencies as a means of payment is prohibited in Vietnam.

Ms Nguyen Thi Minh Phuong - Pomona University (USA): In 2022, boost trade defence

Vietnam's import-export turnover increases rapidly in the period 2021-2025, which ay not excluded that the number of cases related to trade remedies will increase rapidly. With the increasing importance of the import-export scale, the structure of import-export products changes rapidly. Many new import and export items appear and may have a large import-export scale. The list of import-export items will be mainly guided by 3 categories from the perspective of applying trade remedies.

Group 1 include goods that use many static comparative advantages such as land, available domeslabourabor, abundance, water resources, and favourable climate. The measures of exemption and reduction in the largest incentive bracket in terms of land rent, taxes, fees create a high-cost advantage. These are items that are easily considered to be entitled to export subsidies, so it is necessary to carefully and objectively review and evaluate the intrinsic export advantages. This group is often associated with agricultural, forestry and aquatic products and seafood. Data on costs, origin, factor prices, production processes need to be gathered and fully systematized. Policies relating to these commodities should be reviewed on an ongoing basis to be appropriate to the situation.

Group2includegoods that use many dynamic comparative advantages such as raw materials and components imported from many different sources, difficult to determine the policy and make the origin transparent, can be questioned about origin fraud, evading trade remedies. The fact that the types of imported mechanical products or components due to the mechanical industry have not yet developed to their potential may be a sign that the risk of encountering trade remedies is quite high. This is an industry that can receive significant incentives and incentives from the government in the early stages of development, so the export price does not completely reflect the market price or the standard and fair price.  This sign, if revealed to the outside, shows the possibility of being affected by trade remedies.

Group3include goods that use a lot of both static comparative advantage and dynamic comparative advantage, including local, available and externally moved resources such asforeign investment capital, modern machinery and equipment, technology and management team. The organization of design, manufacture, assembly, consumption, and warranty are carried aret according to a complete and scientific supply chain, so the possibility of being applied to trade remedies is low. This is a model that needs to be developed and replicated to ensure the long-term closeness of imported and exported goods.

In addition, commodities that have been reviewed, evaluated, and warned about the possibility of trade remedies such as aquatic products, agricultural products, mechanical engineering, etc., both import and export, need to be reviewed and evaluated all the stages that constitute the value for a long-term adaptive solution. Goods that have been subject to trade remedies should be thoroughly researched, analyzed and reviewed to make case studies, draw lessons from experience and practice of high value.

MMsTran Thi Hue - Institute of Economics - Finance: Sugar prices will increase sharply

According to ISO, in the crop year 2021/22, the global sugar deficit is expected to widen to 3.8 million tonnes from a shortfall of 3 million tonnes in 2020/2021. The reason for this shortage is due to dry weather, which reduces production in Brazil by 5%. (Brazil is the leading sugar producer globally, accounting for 23% of total production in the 2020/21season). Global sugar reserves have fallen from their peak in 2018/19 from 53.1 million tonnes to 45.8 million tonnes in 2020/21 and are likely to fall further to 2016/year levels. 2017, according to an estimated shortfall in the coming crop year.

Sugar prices in 2022 could be supported by higher ethanol prices, which incentivize international sugar mills to switch from sugar production to ethanol production, leading to a reduction in global sugar inventories. According to BusinessInsider, the price of ethanol has increased by 55% compared to the beginning of the year.

In the region, according to Thai Sugar Millers Corporation, Thailand is expected to harvest 80-90 million tons of sugarcane in the 2021/2022 season. This harvest is equivalent to a growth rate of about 21% - 36% over the same period and is quite low in output compared to the 2017 - 2019 period. Global sugar deficit, demand is expected to recover after the pandemic is expected to support world sugar prices. World raw sugar prices have recently increased sharply to 2016/2017 levels (about 20 cents/lbs) when it is forecast that ending inventories of 2021/2022 will return to the same level as those of 2016/2017.

In Vietnam, in 2021, the domestic sugar price will approach the regional sugar price, surpassing the Thai sugar price by 10%, but still being about 7% -19% lower than other countries. At the end of 2020, Vietnam's sugar price is about 27%-39% lower than the regional sugar price. While the impact of tax rates has been partially reflected in domestic sugar prices, tax evasion investigations and the global deficit will continue to drive sugar price increases rapidly through 2Mr.

Mr. Nguyen Quoc Lan - Deputy Director of Industry and Trade Information Center - Ministry of Industry and Trade: Pork price movement depends on the situation of COVID-19 pandemic control

The evolution of pork prices in 2022 will depend on the control of the COVID-19 pandemic. However, with the policy of flexibly adapting to the pandemic, the price of live hogs will not have drastic fluctuations like in September-October 2021. With this prospect, smallholder farmers broke even and made a slight profit. And livestock enterprises may make a profit of 10,000 - 15,000 VND/kg due to the production cost fluctuating only 45,000 VND/kg.

Thus, the pork market at the end of the year is considered an opportunity for large livestock enterprises with advantages in capital and a closed ecosystem. However, the supply of livestock enterprises only accounts for 23-24% of the total herd, bringing the market balance, not being able to control and manipulate prices. Following the development trend, livestock enterprises are growing stronger and the number of smallholder farmers is shrinking. It is forecasted that with this momentum, the supply of live pigs and pork of large enterprises may account for 30% in 2022.

An An