Prime Minister Pham Minh Chinh revealed that the Vietnam economy is facing more risks in 2022 due to the lingering effects of COVID-19. According to Bloomberg, he told a government website that a widening state budget deficit and increasing bank bad debts are a few of the issues the country will face this year.
He added that struggling businesses, disbursement of public investments at a multi-year low and the state budget’s increasing non-recurring revenue are among the other challenges the Vietnam economy needs to overcome in 2022.
The government continues to mull a potential stimulus that would assist businesses, workers and increase infrastructure spending. A recent proposal would see VND347 trillion (USD15.25 billion) pumped into the economy. However, nothing was agreed to during a National Assembly special session held at the start of the year and some lawmakers are concerned this would lead to greater inflation.
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Optimism remains for the Vietnam economy in 2022
Despite the Prime Minister’s recent warning, there is optimism for the Vietnam economy in 2022. The World Bank forecasted the country’s growth to be 6.5-7 percent this year citing vaccination rates and sustained global recovery as primary reasons for its positive outlook.
And while the Asian Development Bank slashed Vietnam’s growth estimates for 2021 late last year, the organization maintained its GPD growth prediction of 6.5 percent for 2022. According to the Ho Chi Minh City Institute for Development Studies, the key to reaching this target will be disbursing VND526 trillion (USD23.25 billion) worth of public investment.
However, other experts believe a sizable stimulus package is required for the country to achieve 2022 GDP growth targets and get the economy back on track.
“Without special support programs, without fiscal and monetary stimulus packages, Vietnam will miss opportunities, be left behind, and not realize its five-year economic development targets,” Economist Can Van Luc explained.
