Economic growth: Optimism and caution

The driving force of economic growth

More than 5% is the level GDP growth 1st quarter of 2022. This is the highest level of the first quarter in the past 3 years and is also the period when the economy was greatly impacted by the COVID-19 epidemic.

This positive start is due to the efforts of the whole political system to keep the economy from missing the pace of the recovery, which has been effective, and the policies changed towards a flexible approach to the pandemic. and higher vaccination rate that many economic activities have gradually recovered, of which the largest contributor is industry, construction growth of 6.38%. The service sector regained 4.58% growth. Agriculture, forestry and fishery increased by 2.45%.

Realized FDI in the first quarter reached over $4.4 billion – the highest increase of the first quarters in the past 5 years. This also means that more industrial parks, processing and manufacturing plants will be formed from capital sources of foreign investors.

The index of industrial production increased steadily over the months, showing the stability in production activities, workers, confidence of enterprises and foreign investors. In addition, the outstanding figure is the number of more than 60,000 enterprises entering and re-entering the market. This is a record number of enterprises entering and re-entering the market in the first quarter so far.

Those are very positive signs of economic recovery at the beginning of the year. But with the large openness of Vietnam’s economy to the region and the world today, the question is how will we cope with external economic shocks such as epidemics, conflicts, etc. prices, inflation… The global economy is forecasted to decrease in 2022 compared to previous forecasts. The World Bank forecasts global economic growth will reach 4.1% in 2022 while this figure of the International Monetary Fund is 4.4%. And Fitch Rating has revised down its forecast for world GDP growth in 2022 to 3.5%.

Inflation soars In the world

Inflation in many European or Asian countries is increasing to its highest level in many years, due to soaring energy prices, which is influenced by the Russia-Ukraine tension and increases pressure on the economy. governments of countries.

Spain’s inflation rose to its highest level in nearly 37 years as energy prices skyrocketed, influenced by the Russia-Ukraine tension, adding to pressure on the government. According to preliminary estimates published by the National Statistical Institute (INE) on March 30, this month, Spain recorded a spike in inflation to 9.8% from 7.6% in February. The highest inflation rate since May 1985

Mr. Carlos, a resident of Spain, said: “Obviously the price of gas affects our economy. I drive a lot, run many kilometers. In the long run, I feel it.”

Ms. Concha, a lecturer at the University, Spain, shared: “My purchasing power will decrease. I will have to choose between using a car or doing other things.”

(Illustrated image – Photo: Getty Images)

French inflation rose more than expected in March and hit a record high. The French statistics agency INSEE said consumer prices rose 1.6 percent in March. The full-year inflation figure was 5.1 percent, up from 4.2 percent reported in February. now on.

Mr. Michel Bloudeau, from France, said: “It’s scary for us because we’re retired. Our pensions are the same, it’s been many years since they were increased and our purchasing power. It’s in decline, that’s obvious. So we can’t do what we want. We’re already struggling to buy food, and it’s getting harder. unfortunately broadcast”.

In Indonesia, according to the head of the Central Statistics Office, the inflation rate in March was the highest monthly inflation since May 2019. The main reason is due to the increase in prices of food products and household fuels such as red pepper and cooking oil

Not only Indonesia, according to an economist from the Asian Development Bank (ADB), although inflation is affecting Asian countries, it is still manageable. It is important that central banks in the region monitor each country’s inflation closely.

According to international organizations, Vietnam’s economic management is showing the flexibility needed to create a balance such as flexible operation through the economic recovery support package, not pushing money into circulation. , does not create additional pressure, instead deducts directly for the beneficiary group.

Ms. Michele Wee, General Director of Standard Chartered Bank Vietnam: The current context shows that challenges not only for Vietnam but many other countries are balancing between economic growth and price stability. Inflation risks, impending global shift towards monetary tightening could reduce policy flexibility. We believe that the SBV needs to keep interest rates unchanged, thereby helping to support credit growth and manage inflation risks. We expect Vietnam’s recovery to accelerate markedly in 2022, starting at the end of Q1. Growth forecast is 6.7% for 2022 and 7% for 2023.

Mr. Tim Evans, General Director of HSBC Vietnam: At the end of February, Vietnam’s exports showed a steady recovery. Exports increased by 13.6% year-on-year thanks to growth in other sectors, showing that factors outside Vietnam are very positive. However, Vietnam needs to be cautious in the context of high oil prices, and Vietnam’s trade has been clearly affected. While the base effect and the electronics sector that frequently require imports were the main drivers behind the strong import growth, petroleum imports in February nearly doubled last year’s one-month average. We appreciate the 350 trillion dong support package to boost production and investment, which was deployed early in the first quarter of this year. Vietnam’s medium-term outlook remains positive.

Mr. Nguyen Minh Cuong, Chief Economist of the Asian Development Bank (ADB): Currently, Vietnam is maintaining an expansionary monetary and fiscal policy for economic recovery, but the potential for these two policies is gradually limited. In this context, control over services within the state’s management is very important such as gasoline, education, health care, electricity service prices, etc. The adjustment of these strategic commodities in addition to ensuring compliance with requirements. demand, market roadmap, reducing pressure on the state budget, but also need to make sure to consider growth drivers.

Ms. Sagarika Chandra, Country Credit Director of Fitch Ratings in the Asia-Pacific region: Currently, inflation is not a major concern threatening the Vietnamese economy. Vietnam has actively implemented measures to stabilize the macro-economy and improve the financial-banking system. In particular, the issuance of a fiscal-monetary stimulus package worth 350 trillion dong has helped Vietnam stabilize public debt, maintain its growth potential in the medium term, foreign exchange reserves are at a record level, creating a buffer for Vietnam to respond to external shocks. Therefore, Fitch ratings forecast that efforts to maintain macroeconomic stability, strive for a high growth rate, and further improve public finances through sustainable fiscal consolidation will be positive factors that will contribute to the success of the economy. further improve the national credit rating in the coming time.

In general, Vietnam’s recovery momentum stabilized in the first quarter. Most importantly, the pillars of economic growth have rebounded quickly with the rapid and effective absorption of economic stimulus packages. society.

However, the problem now is that the pressure of consumption of goods, services and investment will increase in the coming months. Therefore, one of the priorities right from the beginning of the second quarter is to continue to strengthen control of prices, markets and ensure the circulation of goods, as well as promote domestic production to move towards self-sufficiency in supply. domestic raw materials, fuel and materials, thereby limiting the impact of world price increases on the Vietnamese market.

Events and Comments program broadcast on April 2 with the participation of Mr. Nguyen Trung Tien, Deputy General Director of General Statistics Office and Prof. Dr. Hoang Van Cuong, Member of the National Assembly’s Finance and Budget Committee will discuss this in more detail. We invite you to follow along!

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