Việt Nam's GDP growth has been forecast to accelerate at a 5.5 per cent rate in 2022 from a dismal 2.58 per cent during the previous year, according to a report released by World Bank yesterday. 

 

Fiscal deficit and debt are expected to remain sustainable, with the debt-to-GDP ratio projected at 58.8 per cent, well below the limit set by the National Assembly. 

 

World Bank's forecast for the Southeast Asian economy is to be taken with the usual caveat that the COVID-19 pandemic will be brought under control at home and abroad. According to the report, the country's services sector will gradually recover as consumer and investor confidence firms, while the manufacturing sector benefits from steady demand from the US, the EU and China.

 

The World Bank, however, warned of possible new variants of the virus, which may prompt renewed social distancing measures, hampering economic activity. Weaker-than-expected domestic demand could weigh on the recovery. 

 

In addition, Việt Nam's trading partners are facing dwindling fiscal and monetary space, potentially restricting their ability to further support their economies if the crisis persists, which in turn could slow the global recovery and weaken demand for Vietnamese exports.

 

The World Bank called for careful policy responses that may help mitigate risks including temporary reduction of VAT rates and more spending on health and education, which stimulate domestic demand. 

 

Support for affected businesses and citizens should be more substantial while social protection programmes could be more carefully targeted and efficiently implemented to address the severe and uneven social consequences of the crisis. Heightened risks in the financial sector should be closely monitored and addressed proactively.

 

Greener trade

 

The report also called for Việt Nam's trade to become less carbon-intensive. In the past two decades, trade has accounted for one-third of the country’s total greenhouse gas emissions and pollution.

 

“Trade will be a key component of Việt Nam's climate actions in the years to come,” said Carolyn Turk, World Bank Country Director for Việt Nam.

 

“Promoting greener trade will not only help Việt Nam follow through on its pledge to reach net-zero emissions in 2050 but will also help it keep its competitive edge in international markets and ensure trade remains a critical income and job generator," she said. 

 

While the country has started to decarbonise activity associated with trade, more needs to be done to respond to mounting pressures from main destination markets, customers, and multinational companies for greener products and services.

 

The report recommends the Government act on three fronts: facilitate the trade of green goods and services, incentivise green foreign direct investment, and develop more resilient and carbon-free industrial zones. — VNS