Vietnam’s economic growth is expected to accelerate to 5.5% in 2022, and greening its trade will provide new opportunities
HANOI, January 13, 2022 – Vietnam’s economic recovery is expected to accelerate in 2022, with GDP growth expected to rise to 5.5%, from 2.6% in the year just ended, according to the update. World Bank Economic Update for Vietnam Taking Stock.
Assuming the COVID-19 pandemic will be brought under control at home and abroad, forecasts predict that the Vietnamese service sector will gradually recover as businesses of consumer and investor confidence, while the manufacturing sector benefits. sustained demand from the United States, the European Union, and China. The budget deficit and debt are expected to remain sustainable, with a projected debt-to-GDP ratio of 58.8%, well below the statutory limit.
The outlook, however, is subject to serious downside risks, especially the unknown course of the pandemic. Outbreaks of new variants may prompt new social distancing measures, hampering economic activity. Weaker than expected domestic demand in Vietnam could weigh on the recovery. In addition, many trading partners face shrinking fiscal and monetary space, potentially restricting their ability to further support their economies if the crisis persists, which in turn could slow the global recovery and weaken demand. Vietnamese exports.
Prudent policy responses could mitigate these risks. Fiscal policy measures, including a temporary reduction in VAT rates and increased spending on health and education, could support aggregate domestic demand. Support for businesses and concerned citizens could be greater and more targeted. Social protection programs could be better targeted and implemented effectively to deal with the severe and uneven social consequences of the crisis. Increased risks in the financial sector need to be closely monitored and proactively addressed.
Entitled “NO TIME TO LOSE: The Challenges and Opportunities of Cleaner Trade for Vietnam,” this edition of Taking Stock argues that greening the business sector should be a priority. Trade, although a major driver of Vietnam’s remarkable economic growth over the past two decades, is carbon-intensive – accounting for one-third of the country’s total greenhouse gas emissions – and polluting.
As Vietnam has started to decarbonize trade-related activities, much remains to be done to respond to growing pressures from major destination markets, customers and multinational companies for greener products and services.
“Trade will be a key component of Vietnam’s climate actions in the years to come,” said Carolyn Turk, World Bank Country Director for Vietnam. “Promoting greener trade will not only help Vietnam deliver on its promise of achieving net zero emissions by 2050, but will also help it maintain its competitive edge in international markets and ensure that trade remains a generator. essential income and jobs. “
The report recommends that the government act on three fronts: facilitate trade in green goods and services, encourage green foreign direct investment, and develop more resilient and carbon-free industrial zones.
Taking Stock is the World Bank’s semi-annual economic report on Vietnam.