WB highlights positive signs in Viet Nam’s economic development in January
VGP - The World Bank highlighted positive signs in Viet Nam’s economic development in the first month of 2022, including the strong start of the foreign direct investment (FDI) commitment and disbursement, inflation remaining under control and the budget registering a sizable surplus.
In its Viet Nam Macro Monitoring for February,, the World Bank noted that Viet Nam's industrial production continued to grow, though at a slower pace and with mixed performance across sub-sectors while retail sales posted the first positive year-over-year growth rate since the COVID-19 outbreak starting in late April 2021.
In January, retail sales grew by 6.7 percent against the previous month and 1.3 percent compared to the same period last year. This recovery was fueled by strengthening consumer demand, particularly for goods as households prepared for Tet celebration.
Remarkably, Viet Nam attracted US$ 2.1 billion of FDI commitment in January, a year-on-year increase of 4.2 percent. Growth was driven by large investment in expansion of existing businesses, particularly in electronics and by active M&A activities. The latter doubled in value in January 2022 compared to a year ago, reaching over US$400 million (or 20 percent of total FDI commitment).
In January 2022, a new Economic Recovery Support Program was adopted for 2022-2023, with on-budget fiscal measures totaling about 4.5 percent of revised GDP. The main components of the Program include continued tax and land rent deferrals, a two-percentage-point reduction in VAT rate and additional public investment.
The WB suggested that, health measures, such as the vaccination program and "5K message" should continue as the country is opening schools and plans to lift border restrictions on international visitors to revive the tourism sector, and the risk of another COVID-19 variant outbreak affecting the economy exists.
The new Economic Recovery Support Program could be enhanced through adding further social protection measures to support workers and households affected by the pandemic. Additionally, to ensure that the program has the intended impact on the economy, program implementation should be monitored closely.
Vigilance about the financial sector should continue, given the ongoing effects of the crisis and new potential shocks associated with increasing interest rates in the U.S., recommended the WB.