Vietnam To See Growth Accelerate In 2022 But Headwinds Are Rising

Key View:

• We expect Vietnam’s real GDP growth to accelerate to 6.8% in 2022, up from 2.6% in 2021 and 2.9% in 2020; the economy expanded by 5.0% y-o-y in Q122.
• Growth recovery will be underpinned by base effects and a continued easing of Covid-19 restrictions.
• Nevertheless, we note that headwinds to growth have risen following the outbreak of the Russian-Ukraine conflict, which have led us to revise down our growth forecast for Vietnam by 20bps.

We at Fitch Solutions have lowered our Vietnam’s 2022 real GDP growth forecast to 6.8% from 7.0% previously as economic headwinds have risen following the outbreak of the Russia-Ukraine conflict. Notwithstanding the downward revision, we still expect the Vietnamese economy to rebound strongly in 2022 from the growth print of 2.6% in 2021 and 2.9% in 2020. In Q122, Vietnam’s real GDP expanded by 5.0% y-o-y, marking a second straight quarter of growth. We expect economic growth to pick up over the coming quarters, underpinned by a continued lifting of Covid-19 restrictions and base effects.

Looking at GDP from a sector perspective, all three main sectors expanded in Q122 amid continued reopening of the economy from the strict lockdown imposed in Q321. Industry and construction grew by the fastest at 6.4% y-o-y, services expanded by 4.6%, while agriculture, forestry, and fishery saw growth of 2.5%. The crucial manufacturing sub-sector, which accounts for 26% of GDP, also saw strong growth of 7.8% y-o-y.