A writing published by the London-based Financial Times on September 26 described Vietnam as one of the seven economic wonders of a worried world.
It noted in periods of gloom like this one, when commentators see nothing but faults in most countries, it is worth highlighting the few that defy the prevailing pessimism. The seven that stand out in a world tipping towards recession and higher inflation are Vietnam, Indonesia, India, Greece, Portugal, Saudi Arabia, and Japan.
They share some combination of relatively strong growth, moderate inflation or strong stock market returns compared with other countries.
The writing said the least surprising name on the list is Vietnam, adding that by investing heavily in the infrastructure required of a manufacturing export power, and opening its doors, Vietnam is growing at nearly 7%, the fastest pace in the world.
For the remaining economies, the article also analysed factors that help them steer clear of a global economic recession.
It held that any of these economies could falter, but these nations are already among the top performing stock markets this year. Amid well-founded worry about global prospects, a new set of winners is emerging.
Vietnam’s economy is expected to grow by 7.2 percent in 2022, on the back of a strong rebound in domestic demand and continued solid performance by export-oriented manufacturing, according to the World Bank East Asia and Pacific Economic Update, October 2022.
The economy rebounded strongly from COVID-19-related lockdowns in the third quarter of 2021, expanding by 6.4 percent in the first half of 2022, the report said.
The WB attributed the rebound to a recovery of exports and the release of pent-up demand following the removal of COVID-19-related mobility restrictions and, more recently, the gradual return of foreign tourists.
In the medium to long term, achieving Vietnam’s goal to become an upper-middle income economy will depend on transitioning to a productivity and innovation-led growth model based on a more efficient use of productive, human, and natural capital, the bank said.
The WB forecast that growth in the region is projected to decelerate from 7.2 percent in 2021 to 3.2 percent in 2022, which is about two percentage points slower than was expected in April 2022.
Potential output in the region is now projected to expand 4.6 percent year-on-year over the 2022-2030 period, down from 6.5 percent in the decade preceding the pandemic.
According to a forecast by the WB in April, East Asian and Pacific countries can achieve an economic growth of 5 percent in 2022.
Vietnam has attracted more than $18.7 billion in foreign direct investment (FDI) during the initial nine months of the year, an annual decline of 15.3%, according to detail compiled by the Foreign Investment Agency (FIA).
Despite this drop, FDI disbursement continued to increase sharply, reaching $15.4 billion in the reviewed period, a rise of 16.2 percent compared to the same period from last year.
This high disbursement rate can be viewed as a positive sign as FDI firms have resumed and expanded post-pandemic production, noted the FIA.
Although newly-registered capital has yet to fully recover due to global supply disruptions and geo-political fluctuations, the adjusted capital and capital contribution and share purchase by foreign financiers inched up by 29.9 percent and 1.9%, respectively.
These impressive figures affirm the confidence of foreign investors in the Vietnamese economy and the local investment climate, a factor which has made them not hesitate to expand investment in the country.
Throughout the reviewed period, 1,355 new projects capitalised at $7.12 billion were granted investment registration certificates, an increase of 11.8 percent in project numbers compared to the same period from last year, despite being a drop of 43 percent in capital.
This sharp fall in newly-registered capital can largely be attributed to policies implemented in order to contain the COVID-19 pandemic, a factor which have made it difficult for foreign investors to move to Vietnam and explore investment opportunities, as well as challenges in carrying out procedures related to investment registration.
Meanwhile, the global market has recently experienced sharp fluctuations as a result of the geo-political conflict in Europe, high inflation pressure, and supply chain disruptions, all of which have combined to negatively affect the investment capital outflow of major economies, especially Vietnamese investment partners.
FIA statistics also show foreign financiers have invested in a total of 18 out of 21 national economic sectors in the country. The processing and manufacturing industry continued to take the lead by attracting over $12.1 billion, or 64.6 percent of the total registered investment capital.
The real estate sector ranked second with total investment capital of over $3.5 billion, followed by science and technology with $ 676.9 million, and wholesale and retail industries with $617.9 million, respectively.
Singapore remained Vietnam’s leading foreign investors with over $4.75 billion, representing a year-on-year fall of 24.3%, trailed by the Republic of Korea with over $3.8 billion and Japan with over $1.9 billion.