An IMF team led by Mission Chief to Viet Nam and Division Chief in the IMF's Asia and Pacific Department Era Dabla-Norris conducted discussions for the 2022 Article IV consultation with Viet Nam from April 4-20.
Spurred by an impressive vaccination drive and accommodative policies, the economy is rebounding from a severe pandemic wave in 2021, the IMF stated.
The recovery is projected to strengthen, supported by the recently-approved Program for Recovery and Development (PRD). Growth is projected at 6.0 percent in 2022 and 7.2 percent in 2023.
The conflict in Ukraine is expected to have a moderate impact on the pace of the recovery and inflation. Despite rising commodity prices, inflation has been contained and is expected to remain below the authorities' 4 percent target.
Policymaking should be agile, and the size and composition of policy support proactively adjusted to the pace of recovery. Fiscal policy should take the lead in policy support, especially if downside risks materialize as the scope for further monetary easing is limited in light of rising inflation risks.
Efficient and steadfast implementation of the PRD will be key to supporting growth. The PRD appropriately prioritizes health, economic recovery, and medium-term growth prospects.
The IMF suggested that going forward, fiscal policy will need to strike a balance between providing temporary, targeted support and facilitating economic transformation
Revenue mobilization should be enhanced to finance a permanent strengthening of social security, build resilience to climate change and address pressures from population aging.
The IMF team welcomes Viet Nam's pledge to reach net-zero emission by 2050.
Decisive structural reforms are needed to address longstanding challenges related to the business environment, especially for SMEs, labor quality and skill mismatches, and governance, recommended the IMF.