According to the statistics, the third quarter may be the growth peak of 2022, the economy recovers and reaches the highest GDP growth in 12 years. However, forecasts show that economic growth in the fourth quarter of 2022 as well as in 2023 are said to be extremely difficult and under a lot of pressure.
GDP growth in the first 9 months of the year exceeded expectation
The statistics on the 9-month socio-economic situation published by the General Statistics Office still surprised the public, despite prior forecasts. According to the General Statistics Office, GDP in the third quarter of 2022 reached a growth rate of 13.67%, the growth rate of the first 9 months of 2022 was 8.83%, exceeding the economic scenario that the Government has expected at the beginning of the year. 8,83% in 9 month is the highest growth rate recorded between 2011 and 2022.
In which, the agriculture, forestry and fishery sector increased by 2.99%, contributing 4.04%, the industry and construction sector increased by 9.44%, contributing 41.79%; the service sector increased by 10.57%, contributing 54.17%. Processing and manufacturing industry plays a crucial role in the whole economy with a growth rate of 10.69%.
FDI capital implemented in Vietnam in the first 9 months of 2022 is estimated at 15.43 billion USD, up 16.3% over the same period last year. This is the highest amount of FDI in 9 months in the past 5 years. However, the total newly registered, adjusted, and capital contribution and share purchases of foreign investors only reached more than 18.7 billion USD, down 15.3% over the same period in 2021.
Read more: Vietnam’s economy in the past 10 years: impressive developments
Economic growth in fourth quarter of 2022 is under pressure
The instability of international markets
Vietnam’s economic activities take place in the context of a volatile world: the Russia-Ukraine conflict from the beginning of 2022 has caused complicated fluctuations in international gasoline prices, disrupted food and gas supplies…; other costs have also risen as a result of the conflict. If political tensions continue to rise, it could lead to extreme consequences for energy security, food security, and commodity supply,… Besides, China continues to maintain a zero-Covid policy, causing the supply chain to be disrupted, the market to be divided, and trade activities to become difficult.
The instability of the international market will seriously affect production and export activities in Vietnam. According to data from the Ministry of Industry and Trade, the country’s export turnover in July 2022 decreased by 1.1% compared to the previous month. Reports by UOB Bank shows slowing consumer demand in economies has caused export growth to slow down significantly, the export value in September 2022 reached 29.9 billion USD, lower than the average of 31.3 billion USD in 2022. Exports and processing of wood and textiles from Ho Chi Minh city specifically are facing difficulties because the key markets, which is the US and Europe, are constantly reducing orders due to inflation. This situation is likely to continue even until 2023 if the inflation and political situation in these countries remains volatile.
Inflation in major economies is likely leading to recession
In the first half of 2022, the upward trend of inflation continues to be prolonged and has peaked in many economies. Overall inflation has far exceeded the expected point set by central banks, even soaring in many emerging economies such as Turkey, Argentina, Brazil and is rinsing rapidly in Central and Eastern Europe, Latin America, the US and the UK, ranging from 7.6% – 10.2%.
Deputy Minister of Planning and Investment Tran Quoc Phuong acknowledges the problem of global inflation. He stated that the problem, especially in major economies and partners of our country, is unlikely to end in the next 1-2 months and is likely to extend to 2023. Inflation and policies to control inflation with very high intensity of major economies will easily lead to economic recession, Mr Phuong added.
Credit supply continues to be limited
The supply of credit continues to be limited due to many factors. The risk of bad debts is emerging after the tightening of credit supply plus the expiration of Circular 14/2021, enterprises can only structure debts until the end of 6/2022. Q3/2022 recorded a high increase in total bad debts and bad debt ratio of banks.
UOB bank expressed their worries for the growth outlook for 2023, as monetary tightening from central banks is expected to have its affect on the US and Europe, the two main export markets accounting for 41% of Vietnam’s export market share.
Two scenarios for 2022 GDP growth forecast
At the regular Government press conference held in September, the Ministry of Planning and Investment introduced two GDP growth scenarios for the fourth quarter and the entirety of 2022. The worst-case scenario is that the fourth quarter may faces many unpredictable risks, and GDP growth at the end of 2022 will reach 7.5%. The second scenario, without any mutations of the current development and in the favorable conditions for the Vietnamese economy from the outside, the expected GDP growth rate in 2022 is about 8%.
Vietnam’s economy production depends a lot on the source and price of raw materials, imported materials, the size, resilience and competitiveness are modest, so it is greatly affected by the world’s complicated political situation. This requires authorities to be flexible and cautious in policy administration. The Asian Development Bank (ADB) warned that Vietnam’s economy will continue to face growing risks: a global economic decline could affect Vietnam’s exports; the labor shortage is expected to impact the rapid recovery of the labor-intensive service and export industries; the slow disbursement of public investment and social expenditures, especially the delayed implementation of the Government’s economic recovery and development program, may reduce the growth rate this year and the next.
Deputy Minister of Planning and Investment, Mr. Tran Quoc Phuong’s speech at the seminar
With the economy under a lot of pressure and risks, it is difficult to gauge an accurate number of growth results in the next few months, let alone further in the future. Mr. Phuong expected the growth to be approximately 6.5% in the year 2023.
Compiled from: Investment Newspaper, Saigon Times, People’s Army Newspaper
Photo credits: General Statistics Office, Vietnambiz
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