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The World Bank forecasts that Vietnam has the highest growth rate among the 5 Southeast Asian economies

08/06/2022

In its updated global economic prospects report released on June 7, the World Bank (WB) forecasts that Vietnam's economy will grow by 5.8% and 6.5% in 2022 and 2023, respectively - the highest rates among the Philippines, Malaysia, Indonesia and Thailand.

In May, Vietnam recorded a bright spot from the industrial production sector. According to data from IHS Markit, Vietnam's PMI index reached 54.7 points compared to 51.7 points in April. Notably, new orders and export orders both increased rapidly despite signs that world demand is constrained by lockdown measures in China.

The positivity of the manufacturing sector in Vietnam is quite remarkable compared to the regional and global PMI. Compared to the remaining 4 countries, namely the Philippines, Malaysia, Indonesia and Thailand, only Vietnam's manufacturing PMI increased faster in May.

Also in the report, the World Bank believes that growth in the East Asia - Pacific region will reach 4.4% in 2022. This bank said that compared to other regions, East Asia - Pacific so far less affected by spillovers from Russia-Ukraine tensions. However, the impact of this war on commodity prices and global demand will still hold back the recovery, especially in commodity-importing economies.

The protracted Russia-Ukraine conflict and growing geopolitical uncertainty could further undermine global confidence, leading to a slower-than-expected regional export growth due to weaker global demand, further increases in transportation costs and distorted trade flows.

Shortages of essential inputs can disrupt production and slow recovery, especially for countries that depend on food and fuel imports (such as Cambodia, Mongolia, the Philippines, Thailand, etc.)

Furthermore, the World Bank believes that rising commodity prices and higher-than-expected inflation may increase the risk that inflation expectations would come true.

Giving a general assessment of the global economy, the World Bank of the opinion that many countries will find it difficult to escape the recession due to risk factors such as conflict in Ukraine, China lockdown, supply chain disruptions and high inflation risks - slow growth globally.

The World Bank also lowered its global growth forecast for this year to 2.9%, down sharply from 5.7% last year and 4.1% forecast earlier this year.

 

Kylie Nguyen

© 2019 Vietnam Bank for Agriculture and Rural Development No. 2 Lang Ha street, Ba Dinh district, Hanoi, Vietnam
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