Toward GDP Growth of 6-6.5% in 2022

10:37:13 AM | 1/11/2022

The 5-year Socioeconomic Development Plan for 2021-2025 sets out 23 key indicators: 5-year average GDP growth of 6.5-7%, the share of processing and manufacturing industry to GDP at 25%, digital economy to GDP at 20%, and the total factor productivity (TFP) to growth at 45%.

2022 is a year of great significance, foundational for realizing 5-year goals set for 2021-2025. International and domestic contexts are expected to bring together advantages, opportunities, difficulties and challenges. However, under the drastic administration of the Government and the joint effort and consensus of the entire political system, the business community and people nationwide, Vietnam still set a target GDP growth of 6-6.5%, a consumer price index (CPI) of 4%; and State budget deficit to GDP of 4%.

Overcoming hardships caused by the Covid-19 pandemic

2021 was an eventful year. This was the first year of carrying out the resolution of the 13th National Party Congress, the 10-year socio-economic development strategy for 2021-2030 and the 5-year socioeconomic development plan for 2021-2025 amid more serious difficulties and challenges. As the Covid-19 pandemic recurred with new strains and variants, the world economy remained uncertain and its growth was volatile. Southeast Asian nations were severely affected. In Vietnam, the fourth Covid-19 pandemic breakout with the much more dangerous Delta and Omicron variants spreading out in many localities, particularly in all the economic locomotives of the country. The country had to adopt many unprecedentedly strong and resolute measures to prevent and control the pandemic.

In that context, in order to overcome serious impacts caused the Covid-19 pandemic, the Government directed all levels of authority, branches and localities to adhere to the Resolution of the 13th National Party Congress, resolutions and conclusions of the National Assembly and Central Party Committee, the Politburo and the Party Secretariat and resolutions, programs and action plans of the Government; closely and flexibly coordinated fiscal, monetary and other policies; focused on solving difficulties, removing obstacles and overcoming challenges; endeavored to realize the goals, tasks and solutions assigned by the National Assembly.

According to statistics, in 2021, GDP expanded by 2.58%; trade value grossed US$668.5 billion, up 22.6% over 2020. The export growth was 19%, higher than the target of 13.6%. The trade surplus amounted at over US$4 billion in the year. Notably, Vietnam had 35 exports worth over US$1 billion each, and 8 items worth more than US$10 billion each.

Although the economy was shaken in the third quarter of 2021 because of the pandemic, foreign investors registered to invest US$31.15 billion to invest in new projects, supplement existing projects and buy local stocks as of December 20, 2021, up 9.2% year on year.

In particular, the business sector made great efforts to live through the tough time and brighten the economic picture. In 2021, the country had 116,800 new enterprises with a total registered capital of VND1,611.1 trillion (US$71 billion), which hired nearly 854,000 employees. In addition, 43,100 enterprises resumed their operations, bringing the total number of new active companies to nearly 160,000. On average, 13,300 enterprises were established a month.

Vietnam achieved macroeconomic stability. CPI grew 1.84% in 2021, the lowest growth since 2016. The core inflation rose by 0.81% over 2020. Interest rates dipped; exchange rates and foreign currency markets were stable; and foreign exchange reserves were consolidated. Agriculture continued to affirm its supporting role for the economy and ensure national food security. By the end of the year, about 68% of communes met new rural standards. The processing and manufacturing industry fared well. Energy security was guaranteed. Many important national infrastructure projects were launched.

Persistent to achieve macroeconomic stability

In 2022, the Government aims to safely, flexibly adapt to, effectively control the COVID-19 pandemic, maximize human health and life, and make good use of opportunities to foster socioeconomic recovery and development with comprehensive solutions to stimulate and support the economy, remove difficulties for businesses and people, and not reduce growth drivers in the long term.

The gross domestic product (GDP) growth was expected at 6-6.5%; CPI at 4%; and State budget deficit to GDP at 4%

In order to achieve the above goals, according to Prime Minister Pham Minh Chinh, the Government will further focus on flexibly and effectively carrying out the dual goals of Covid-19 pandemic prevention and control and economic recovery and development. Particularly, it will effectively execute the overall strategy on pandemic prevention and control, with a safe and flexible adaptation roadmap and effective Covid-19 pandemic control, considering this an important and urgent task of all levels and sectors from the beginning of 2022. It will continue to expand coverage, speed up vaccination campaigns for people, and improve the capacity of the health system, especially grassroots treatment.

In addition, the government will flexibly revise and effectively coordinate fiscal, monetary and other policies to maintain macroeconomic stability, control inflation, and ensure major balances; support business recovery, foster export and domestic consumption, increase investment, and mobilize resources for socioeconomic recovery and development.

Notably, Vietnam will give priority to building and perfecting institutions and enforcing laws, solving difficulties, reforming administrative procedures, and enhancing the business and investment environment, according to Prime Minister Pham Minh Chinh. The country will carry out substantive and effective economic restructuring together with reforming growth models; improving productivity, quality, efficiency and competitiveness; and developing a digital economy and digital society. It will make good investment plans and effectively allocate public investment capital; accelerate important national projects and national target programs; strongly increase non-state investment and remove difficulties, obstacles and bottlenecks in investment and business; approve projects on restructuring State-owned enterprises; and effectively restructure credit institutions and handle bad debts and inefficient projects and enterprises.

In addition, the Government will focus on speeding up synchronous modern strategic infrastructure construction and development, especially transport, energy, digital infrastructure, agricultural and rural infrastructure, and climate change. Public investment is used to lead and stimulate social investment, especially public-private partnership (PPP); raise the quality of education and training; accelerate scientific and technological research, development and application; and spur innovation. It will ratify and implement the Education Development Strategy for 2021 - 2030, with a vision to 2045; expedite regional development connectivity, economic and urban area development; pick up the pace of planning formulation and approval; and approve master plans in 2022.

In the context that our country is facing numerous difficulties and challenges with unpredictable Covid-19 pandemic developments and impacts, the task of carrying out the socioeconomic development plan in 2022 and beyond will be very hard to be achieved. But, with the spirit, will and determination, Vietnam will surely soon repel the pandemic to recover socioeconomic development, constantly improve the material and spiritual life of the people, and lead the country forward on the path of innovation, integration and development.

By Quynh Chi, Vietnam Business Forum