In the first quarter of 2022, Vietnam's export turnover of goods reached USD88,579 billion (12.9% YoY).

Public spending as a driver

In the first three months of the year, public investment disbursement showed good signs, with investment capital released from the State budget capital estimated at VND76.3 trillion, equaling 14.4% of the year plan and increasing 10.6 percent YoY.

Public investment should be the driving force for economic recovery. The General Statistics Office estimated that if public investment increases by 1% YoY, GDP will inch up 0.058%. Therefore, the Government took more drastic and effective measures to speed up the disbursement of public spending and promptly handle bottlenecks, ensuring the disbursement rate reaches 100% under Dispatch 126 and Directive 01 dated February 8, 2022.

Besides, the State Treasury is also more flexible in controlling capital expenditure with two mechanisms: (1) control first, disburse later; and (2) disburse first, control later, and shorten the time for capital payment, boosting disbursement and preventing the end-of-the-year rush for disbursement.

Exports continue to grow.

In the first quarter of 2022, Vietnam's export turnover of goods reached USD88,579 billion (12.9% YoY). Data from the General Department of Customs also shows that traditional exports to major trading partners witnessed strong growth compared to the same period in 2021. Mr. Tran Duc Anh said the drivers of Vietnam's export growth in 2022 include:

First, the reopening of the major economies leads to growing demand for goods and services.

Second, with effective FTAs (CPTPP, EVFTA, UKFTA, RCEP), Vietnam's exporters are gradually grasping competitive advantages when benefiting from preferential tariffs.

Third, rising export prices of goods, especially Vietnam's main exports (iron and steel, agro-forestry-fishery, rice), are helping to boost export value.

Fourth, the manufacturing sector sees a strong recovery when Vietnam implements the strategy of "living with COVID-19".

FDI to flow into Vietnam

Mr. Tran Duc Anh believes that the confidence of foreign investors will improve in 2022 for the following reasons: (1) Vietnam has fully reopened international trade as of March 15, 2022, facilitating cooperation between Vietnam and partners and speeding up the implementation of backlogged projects; and (2) Vietnam remains an attractive destination, supported by plenty of signed FTAs, a favorable geographical location, an abundant labor force with relatively low labor costs, and the Government's support policies.

Disbursed FDI totaled USD4,420 million in 1Q22 alone (7.8% YoY). Meanwhile, newly registered FDI was only USD8,907 million (-12.1% YoY) compared to the 1Q21 high, with the main contributions from two newly registered billion-dollar projects worth USD4.41 billion.

As a result, excluding the above two projects, registered FDI still recorded an increase of 14.2% YoY, with the number of new projects increasing by 37.6% YoY and projects with capital adjustment jumping by 41.6% YoY, reflecting foreign investors' optimism about the business environment and continued diversification of the supply chain in Vietnam.

In addition, Mr. Tran Duc Anh also expects tourism and food services to rebound in 2022. This sector has recently shown more positive signals thanks to the following factors: (1) the reopening of international trade and tourism on March 15, 2022; (2) the rising number of domestic and international arrivals, corresponding to a marked increase in the Google Mobility Index compared to the end-September low.

Mr. Tran Duc Anh, Head of Macro and Strategy of KB Securities, said: "KB Securities still maintains its 2022F GDP growth at 6.3% on the expectation that GDP growth in 2Q22 will maintain its upward momentum (6.0% YoY) after the economic reopening with the "living with COVID-19" campaign.

On the other hand, in Mr. Tran Duc Anh’s opinion, the Russia-Ukraine war combined with China’s zero-Covid policy in response to the resurgence of COVID-19 can negatively affect exports, production, and domestic inflation. These two main risk factors will be closely followed and updated.