Signals show that the economy will recover strongly in the second half of 2022, growth in the third quarter may increase to 14%, and inflation will be under control

Trường Lăng

August 1, 2022


Signals show that the economy will recover strongly in the second half of 2022, growth in the third quarter may increase to 14%, and inflation will be under control

Trường Lăng

August 1, 2022

Many organizations believe that the third quarter will be a period of strong growth for the Vietnamese economy, contributing to the growth of the whole year 2022.

In its strategic report for the last 6 months of 2022, Viet Capital Securities Joint Stock Company (VCSC) forecasts that Vietnam’s economy will recover strongly with inflation being under control.

GDP growth in the second quarter reached the highest level in more than a decade, contributing to raising GDP growth in the first 6 months of 2022 to 6.42%, which is the highest level in the past 3 years. In addition to that, VCSC also showed a series of other optimistic signals.

Regarding labor, there were 1 million jobs added in the first quarter and nearly 0.5 million jobs added in the second quarter.

The number of employed workers has now returned to pre-COVID-19 levels with more than 50.4 million (compared to 50.3 million in the second quarter of 2019).

Notably, the unemployment rate fell to the lowest level since the outbreak of the pandemic.

Production continues to grow strongly, with industry-wide IIP up 8.7% year-over-year in the first 6 months of 2022.

The processing and manufacturing industry’s IIP is still the main driving force with an increase of 9.7% in the first 6 months of 2022. In addition, the PMI of production of Vietnam continues to expand (above 50) for the 9th consecutive month.

Consumption recovered in the first half of the year with total retail sales up 11.7% year-over-year (if excluding the price factor, it increased by 7.9% over the same period; in the same period last year, it increased by 1.9%).

Graph: GDP growth, industrial production and exports of Vietnam quarterly, year-over-year (YoY)


Disbursed FDI in the first 6 months of 2022 reached a record high of US$ 10.1 billion (up 8.6% year-over-year). VCSC believes that reopening international borders will help research and investment promotion activities. At the same time, the rise in registered capital for new and expansion projects in 2021 will ensure that FDI disbursement will continue to increase sharply in 2022 and 2023.

In the first 6 months of 2022, export and import turnover reached US$185.9 billion (up 17.3% year-over-year) and US$185.2 billion (up 15.5% year-over-year) respectively, leading to a trade surplus of US$ 710 million (there was a deficit of US$ 1.9 billion in the same period of 2021).

The USD/VND exchange rate increased by 2.0% in the first 6 months of 2022. However, VCSC considers the USD/VND exchange rate to be one of the most stable rates globally in the first half of 2022. Experts at VCSC expect the USD/VND exchange rate to increase by 2.5% in 2022 (higher than the expectation of 1.0% given in March 2022) due to the tightening monetary policy of the US and the strong appreciation of the USD.

Notably, despite rising global inflation, Vietnam’s inflation remains under control with the average CPI for the first half of 2022 at 2.25%, which is the second lowest level in the same period since 2017. Therefore, VCSC maintains an average CPI forecast of 3.5% for 2022.

MB Securities Joint Stock Company (MBS) recently assessed that inflation pressure in the last months of 2022 will be lower than in the first months of the year, although it will still remain at a high level compared to previous years. 

In terms of cost-push, MBS believes that the prices of basic commodities on the world market, after peaking, tend to decrease again, which will reduce inflationary pressures. Public services such as education and health care have been adjusted according to the roadmap. Electricity and fuel prices will be subsidized by the Government to be kept stable.

In terms of pull demand, the demand that was compressed after the COVID-19 epidemic will return to normal, especially in the entertainment and tourism services sectors. Demand for Vietnamese goods and services from the world market may decrease when major economies are under downward pressure due to rising interest rates.

Regarding monetary causes, the State Bank’s policy of restraining credit growth in the second and third quarters will reduce pressure on CPI in the last months of 2022.

Strong growth in the third quarter

The low base level of the third quarter of last year is also the basis for expecting more high growth in the third quarter of this year, contributing to raising growth in the last six months of 2022.

With the same comment, experts from Agribank Securities Joint Stock Company (Agriseco) forecast that economic growth in the last two quarters of the year will continue to be at a high rate of over 7% because of last year’s low comparison base and the tendency to ramp up manufacturing activities in the second half of the year.


Bao Viet Securities Joint Stock Company (BVSC) forecasts GDP growth can reach 14% in the third quarter thanks to the upward momentum from the recovery in consumption and production and the low base level of the third quarter of last year. UOB Singapore forecasts third-quarter growth of 7.6%. 

In the macro update report published on July 19, VNDirect Securities Corporation also forecasts that GDP will surge more in the last 6 months of the year.

“We expect Vietnam’s GDP to grow by 7.8% in the second half of the year, thereby raising the growth rate in 2022 to 7.1%”, experts said. In the third quarter alone, the company forecasts that GDP growth may reach 11%.

Meanwhile, Mr. Michael Kokalari, Chief Economist of VinaCapital forecasts that third-quarter growth will skyrocket thanks to strong domestic consumption.

“Vietnam’s GDP rose sharply in the second quarter and we expect it to soar in the third quarter thanks to continued growth in domestic consumption. Some investors are concerned that the slowdown in the global economy, especially in the US economy, will drag down Vietnam’s GDP growth, but our 7.5% GDP growth forecast has assumed a major deceleration in global economic growth this year,” he said.

According to the growth scenario for the last two quarters of the year developed by the Ministry of Planning and Investment (MPI), with a growth target of 6.5% for the whole year, a growth rate of 7.9% is required in the third quarter. In the second scenario, 9% growth is required in the third quarter to achieve 7% growth for the whole year.

At the Government meeting on July 4, Mr. Nguyen Chi Dung, Minister of Planning and Investment, said that on the basis of economic recovery in the first 6 months of the year, GDP growth this year may reach 7%, exceeding the target set by the National Assembly and the Government of 6% to 6.5%.

Source : VietNamBiz

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