VNDirect points out the factors driving Vietnam’s economic growth, forecasting GDP in 2022 will increase by 7.1%
VNDirect Securities Joint Stock Company has just released a market strategy report for May 2022, according to which the recovery speed of the Vietnamese economy will accelerate in the coming quarters.
VNDirect experts forecast Vietnam’s economy to grow by 5.6% year-on-year (+/-0.2 percentage points) in the second quarter of 2022, improving from 5.0% growth in the quarter. January 2022. In 2022, VNDirect forecasts that Vietnam’s GDP will grow by 7.1% over the same period last year.
To have this growth, experts believe that the main supporting factors came from the low background in the third quarter of 21 when Vietnam’s GDP fell by 6.0%, the Government allowed the reopening of services. non-essential, including public transport, tourism and entertainment.
In addition, the newly implemented economic stimulus package (VAT reduction, scale up of interest rate compensation package, disbursement of infrastructure investment package…) will also be the driving force for higher GDP growth. . FDI inflows recover after the Government allows international commercial flights and export activities continue to improve will also be factors promoting GDP growth.
VNDirect’s report also pointed out some risks affecting the market and the Vietnamese economy. Analysts believe that the first risk comes from Russia-Ukraine tensions that last longer than expected and China’s strict blockade. These two issues raise concerns about supply chain disruptions and weakening global economic growth, the report said.
Specifically, major research institutions have downgraded their global economic growth forecasts by 0.5-0.9 percentage points for 2022 to reflect the impact of the Russia-Ukraine crisis. Currently, global economic growth is forecast in the range of 2.9-3.6% year-on-year for 2022, down from 5.7% in 2021.
The Covid-19 situation and the “Zero-Covid” policy in China have a great risk of disrupting the global supply chain and possibly exacerbating the slowdown in economic growth in 2022.
The second risk according to VNDirect is that the Fed tightens monetary policy stronger than expected. In the minutes of the FOMC’s latest meeting, the Fed signaled that it will shrink its balance sheet earlier than expected, possibly starting at its next meeting on May 3-4.
The Fed is expected to reduce its bond holdings to a maximum of $95 billion a month, including $60 billion in government bonds and $35 billion in mortgage-backed corporate bonds. The amount of the cuts is almost double the peak of $50 billion a month when the Fed narrowed its balance sheet between 2017 and 2019.
The minutes also showed that some Fed officials wanted to raise rates by 0.5 percentage points next time instead of the 0.25 percentage point increase they made at the previous meeting. VNDirect experts believe that the market has partly reflected the Fed’s interest rate hike schedule, however, a stronger-than-expected tightening may affect market sentiment, including developed markets. and emerging.
The third risk is related to inflation. VNDirect’s report shows that inflation risks increase from now until the end of the year due to the impact of the Russia-Ukraine crisis. The sharp increase in gasoline prices increases inflationary pressure on Vietnam, especially the traffic price index. The company forecasts Vietnam’s Q2 average CPI at 3.1% y/y (vs. 1.9% in Q1).
VNDirect believes that higher-than-expected domestic inflation may hinder the economic recovery and cause monetary policy to become tighter. The State Bank of Vietnam has less room to maintain an easy monetary policy to support the economy.
Besides, a stronger USD also puts pressure on Vietnam’s exchange rate, leading to the risk of withdrawing indirect investment capital from Vietnam, and at the same time increasing pressure on public debt.
at Blogtuan.info – Source: cafebiz.vn – Read the original article here
