Vietnam needs to focus more on institutional reform of the economy and shifting to digital economy. Photo: TTXVN

Prominent growth in export production

According to the General Statistics Office, in the first five months of 2022, Vietnam's economic picture had many bright spots. Industrial production growth of 8.3% over the same period last year. In particular, the processing and manufacturing industry increased by 9.2%; exports reached US$152.81 billion, increasing by 16.3% and imports reached US$152.29 billion, rising by 14.9% over the same period last year.

In five months, Vietnam had a trade surplus of US$516 million. Foreign direct investment capital disbursed over this time reached US$7.71 billion, increasing by 7.8% over the same period in 2021.

Another sign showing a clearer signal of economic recovery is that the number of newly-established enterprises was at the highest level in May compared to the same period in the past five years: 13.4 thousand newly established enterprises; an increase of 15.2% over the same period last year. Notably, the economic recovery trajectory entered an acceleration phase, but inflation remained under control. On average, in the first five months of 2022, the consumer price index (CPI) increased by 2.25% over the same period last year, although it was higher than the increase of the first 5 months of last year, it was still lower than the increase of the years 2017-2020; core inflation increased by 1.1%.

From the above results, many international organizations have raised Vietnam's position in the rankings. Specifically, the ASEAN +3 Macroeconomic Research Organization (AMRO+3) assessed that Vietnam's economy was expected to grow at 6.3% in 2022 and 6.5% in 2023. According to the assessment of Nikkei, Vietnam increased 48 places and ranked 14th in the ranking of the Covid-19 Recovery Index.

Assessing Vietnam's economic situation in recent years, Mr. Tran Tuan Anh, Head of the Central Economic Commission, said that the results of socio-economic development in the first months of 2022 were very encouraging. Vietnam's economy was continuing to gradually return to its fast growth trajectory as before the pandemic. Thanks to that, the credit rating agency S&P had just upgraded Vietnam's long-term credit rating from BB to BB+, noting that the Vietnamese economy was on a solid recovery track. It was forecasted that Vietnam's GDP growth in 2022 would be around 6.9% with a long-term trend of 6.5% - 7% from 2023.

Francois Painchaud, the IMF's resident representative in Vietnam and Laos, said that macroeconomic policies had helped reduce the impact of the Covid-19 pandemic. In particular, the Government's economic development and recovery program has been appropriately and timely implemented to support the general growth recovery.

The inflation target for 2022 should not be adjusted

Despite achieving positive results, many economic sectors have had a strong recovery since the first months of 2022. According to many experts, it is necessary to recognize the fact that difficulties and challenges are still great as the Covid-19 pandemic has not ended, gasoline prices may continue to increase in the near future, plus the tension between Russia and Ukraine will lead to an increase in prices of many raw materials and fuels, affecting the supply chain of goods and services of the country and the world. Along with that, inflation in many countries around the world is increasing sharply, which will affect Vietnam's export market in the coming months.

Discussing the inflation control, Dr. Nguyen Bich Lam, former director of the General Statistics Office, said that the inflation target for 2022 should not be adjusted because of macro balances, planning targets, policies and solutions are built on the basis of an inflation target of about 4%. If the inflation target is adjusted, it will cause unnecessary disturbances and cause subjective psychology, reducing the initiative in directing and inflation control. The Government should have a solution. With the inflation rate of the economy in 2022 at 4.5% and 5%, respectively, to proactively take measures to manage the economy and adjust budget estimates and public investment plans.

Dr. Nguyen Bich Lam also said that growth, employment and inflation are always concerns of the Government, economists, and people. In the context that the world economy is in decline and inflation is high in 2022, if Vietnam's economy achieved a growth rate of about 6% and inflation is in the range of 4-4.5%, it would be a success, especially if foreign investors and international financial institutions highly appreciate and believe in continuing to invest in the potential Vietnamese market.

To achieve the growth target in 2022, General Director Nguyen Quang Thuan of FiinGroup said that some industries still need to be "activated" for a stronger recovery. Some industries have very slow recovery such as aviation and international tourism, and construction and materials. This factor will support higher economic growth, especially in the context that interest rates have "bottomed out" and inflation may rise above expectations.

It is forecasted that Vietnam’s economy will recover strongly with an expected growth rate of 6% in 2022 and 7.2% in 2023. However, inflation is also likely to pick up in the short term. Therefore, Mr. Francois Painchaud suggested that Vietnam's fiscal policy should be at the forefront of policy support, especially if the risks of a slowdown in growth occurred. At the same time, Vietnam needs to modernize monetary policy and terminate the regulations that allow debt restructuring but keep debt groups unchanged, and strengthen financial supervision.

Sharing the same comment, economist Le Dang Doanh, former director of the Central Institute for Economic Management (Ministry of Planning and Investment), said that if we did not have appropriate solutions, the economic growth target of 6.5% would be difficult to achieve in 2022. Therefore, as well as removing difficulties and creating favorable conditions for enterprises to access raw materials for production and open export markets, Economist Le Dang Doanh suggested that Vietnam focus more on economic institutional reform, shift strongly to a digital economy, e-Government and focus more on e-commerce - because this is not only a trend but also an inevitable direction in the context of economic changes.