However, in face of existing risks, rising pressure on domestic inflation and the Vietnamese currency, the dong, the country’s fiscal and monetary policies are recommended to be cautious and flexible.
Era Dabla-Norris, Mission Chief to Vietnam and Division Chief in the International Monetary Fund (IMF)'s Asia and Pacific Department, affirmed that effective policies applied by the Vietnamese Government have contributed to the country's positive good economic results so far this year.
The first nine months of 2022 saw a rapid recovery of the Vietnamese economy when COVID-19-related restrictions were removed.
The gross domestic product (GDP) in the first three quarters of this year expanded 8.83%, motivated by strong production and export as well as the growth of retail and tourism.
Dabla-Norris said that Vietnam’s inflation has stayed at a lower level than the majority of countries in the region.
Highlighting some policies that have contributed to the economic results so far this year, she touched upon the Vietnamese Government’s switching of the COVID-19 control strategy and the complete reopening of the country’s economy in March thanks to the super-fast vaccination campaign. This was the key for the resumption of economic motivations, she held.
The expert also underlined the country’s low interest rate and responsive monetary policies that have allowed businesses to return to operation, along with tax cuts to support labourers, including income and environmental taxes, to minimise the impacts of the global petrol price hike, and price freezes for some services, including power, healthcare and education, which have contributed to keeping inflation under control.
Sharing the same view, Chief economist of the Asian Development Bank (ADB) office in Vietnam Nguyen Minh Cuong said the State Bank of Vietnam (SBV)’s raising the ceiling deposit and lending interest rates, and widening the exchange rate band from +/-3% to +/-5% is completely appropriate, contributing to stabilising macro conditions for medium and long-term growth.
Andreas Hauskrecht, Clinical Professor of Business Economics at the Kelly School of Business under the US’s Indiana University, said that Vietnam has done well in curbing inflation, as it is maintained at a low and stable level.
He spoke highly of the central bank’s decisions, and management agencies’ efforts to well address the pandemic’s consequences.
However, the IMF representative pointed to a number of challenges that Vietnam is facing, and gave recommendations, especially on monetary and fiscal policies. She also welcomed the expansion of the trading band for the exchange rate recently, and advised Vietnam to maintain inflation at around 4% in 2023.
She underscored the need to maintain flexible policies and the stability of the financial system, along with the improvement of the business environment and the productivity of domestic firms as well as the capacity of labourers, and continuous economic digitalisation. Vietnam should also focus more on implementing reform policies in climate change to complete its target of net-zero emissions in 2050, she added.
In its latest global economic outlook report, the IMF predicted that the world economy will see a fall of 2.7%, while Vietnam will enjoy a growth of about 5.8%.
Hauskrecht said that, until the time when the US Federal Reserve (Fed) starts to change monetary policy and lower interest rates, Vietnam will have more room to introduce more stimulus measures. He advised the country to keep interest rates stable and have reasonable fiscal policy and prudent monetary policy in the immediate future.
