Vietnam’s economic growth in 2022 projected to be stronger than previously expected

Vietnam's economy is expected to rebound strongly in 2022.

Many expect to see Vietnam’s economy expand by 7.5% this year thanks to the strong recovery of domestic consumption, construction and inbound tourism, as well as the government’s 15 billion USD fiscal stimulus package.

VinaCapital chief economist Michael Kokalari said that he expects household consumption in Vietnam to rebound from minus 6% in 2021 to 5% in 2022, adding that the return of international tourists will also boost domestic consumption.

Recent surveys in the US and elsewhere show a strong demand for travel to Vietnam, with many organisations anticipating that the partial recovery of international tourism will boost Vietnam’s GDP by at least 3%.

In addition, one third of the stimulus package will be spent on infrastructure development while the government appears to be increasing investment in 2022.

As such, the growth of Vietnam’s construction sector, which accounts for 6% of GDP, is expected to rise from 0.6% last year to 10% this year, equivalent to pre-pandemic levels.

The purchasing managers index soared in January thanks to foreign orders rising to the highest level in four years. Foreign-invested firms are ramping up the import of materials to fulfil orders, so it is possible that growth will be stronger this year.

Foreign direct investment (FDI) into Vietnam has remained resilient over the past two years of the pandemic. Vietnam’s FDI fell by only 3% while the global reduction was over 40% in 2020.