Goods loaded at Tân Cảng - Cái Mép Thị Vải in the southern province of Bà Rịa-Vũng Tàu. The country's exports are forecast to grow about 15 per cent and the trade balance will remain modestly positive. — VNA/VNS Photo Huỳnh Ngọc Sơn

HÀ NỘI/SINGAPORE — Việt Nam is expected to accelerate its economic recovery from the pandemic this year after having recorded a 2.6 per cent increase in gross domestic product (GDP) in 2021, Singapore’s Business Times reported.

Once among the poorest countries in the world, its economy is now booming and the World Bank describes it as one of the most dynamic and emerging countries in the entire East Asia region, Business Times said in an article published last week, calling Việt Nam a “new Asian tiger.”

Singapore’s DBS Group Research forecasts Việt Nam's GDP growth to reach 8 per cent in 2022, boosted by an accommodative monetary policy. The International Monetary Fund (IMF) has predicted that Việt Nam will climb three spots to rank third in GDP among ASEAN member states this year, thanks to the fast-growing middle class and the rise of ultra-rich people.

Knight Frank’s latest Wealth Report estimates there were about 19,500 high-net-worth individuals in Việt Nam in 2020, defined as those with assets of at least US$1 million, the article said. By 2025, that number is expected to grow by almost 25 per cent to top 25,000, it added.

Business Times attributed the robust growth of the economy to increasing flows of foreign investment into the country. Many Singapore companies, including CapitaLand and Keppel, have invested heavily in the country as they seize abundant opportunities.

“Việt Nam has long been known as Southeast Asia's coding farm, where talent and wages are in a sweet spot for companies to use it as a base for their technical development,” it noted.

The article also referred to Việt Nam as the largest solar power producer in Southeast Asia today with 16.6 gigawatts of installed capacity as of 2020. Việt Nam's construction industry was set to continue its recovery in 2022 as several large-scale infrastructure projects would move through different stages of development, it further said.

Việt Nam’s economic prospects, challenges in 2022

Another article recently published on the East Asia Forum site also assessed prospects and challenges facing the Vietnamese economy this year.

As per the article, 2021 was a tough year as shutdowns made life difficult and GDP slowed to 2.6 per cent. Increasing supplies of vaccines eventually allowed more normal activities in the last few months of the year. Việt Nam’s GDP shrank 6 per cent in the third quarter before bouncing back in the fourth quarter.

According to the author, despite factory closures, exports rose 19 per cent in 2021 to an astonishing $336 billion, while GDP was only $271 billion in 2020 and grew only slightly in 2021. The high level of foreign direct investment (FDI) did not grow nor shrink much.

The article noted that prospects for Việt Nam in 2022 would be good. As factories and services return to normal, there would be a jump in output. Most projections were for 6–7 per cent real GDP growth. Tourism should start to recover from its over 95 per cent decline from 2019 levels. Exports should grow about 15 per cent and the trade balance would remain modestly positive. Inflation would remain low and the Vietnamese đồng would continue to appreciate slightly against the US dollar.

The author also pointed out that one side effect of Việt Nam’s rapid export growth had been a lag in domestic value-added in exports. Much of the work had been simple assembly rather than the development of a dense network of supplier industries that would make the FDI ‘stickier’ as wages rise and labour supplies tighten. The COVID-19 pandemic slowed progress on this front, as fewer new enterprises opened and many more temporarily closed. Many firms that were still in business were financially weaker and would need time to accumulate resources to improve machinery, training and marketing. — VNS