The Asian Development Bank maintains its 6.5% growth forecast for Vietnam this year despite an expected slowdown in Asia due to global geopolitical tensions.
Vietnam’s economic rebound is expected to continue over the second half of 2022, supported by strong economic fundamentals, flexible monetary policy and a faster-than-expected recovery in manufacturing, services and domestic consumption from July to December, reported the bank. Vietnam’s effective price controls of gasoline, electricity, food, healthcare, and education should keep inflation in check at 3.8% in 2022 and 4.0% in 2023, the bank commented.
According to research by the London School of Economics and the World Bank, FDI is an instrument in helping “developing economies move into higher value-added parts of the value chain,” and high-tech FDI has had a big positive impact on Vietnam’s economy. Moreover, Vietnam also achieved the biggest jump in Harvard's Economic Complexity Index ranking in the last two decades, partly due to the fact that Samsung and Intel investments attracted a flurry of other high-tech investments from Apple, LG Electronics, Dell, and a number of Japanese firms.
The primary motivations for firms to set up high-tech factories in Vietnam include a high-skill, low-wage workforce and the country’s geographic proximity to high-tech supply chains in Asia, according to Kokalari, chief economist at investment fund VinaCapital. Economists said high-tech FDI boosts Vietnam's GDP in two ways: by lifting incomes and improving the country's capability to produce complex products. The former supports GDP growth in the short-term since domestic consumption accounts for two-thirds of Vietnam's GDP, while the latter boosts the country’s long-term economic prospects.
Last week highlight
The Vietnam Business Integrity Index (VBII), the first of its kind in the country to assess enterprises in this regard, was launched on September 21. The index, introduced by the Vietnam Chamber of Commerce and Industry (VCCI) and UNDP Vietnam, has been designed for enterprises of all sizes, forms of ownership, sectors, and structures, regardless of whether they are a listed company, a domestic private company, a foreign invested firm, or a State-owned one. It was built with support from FairBiz, a UNDP regional initiative funded by the British Government within the framework of the ASEAN Economic Reform Programme, which aims at promoting a fair business environment in Indonesia, Malaysia, Myanmar, Philippines, Thailand, and Vietnam.
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Let’s look at some other key financial and business headlines during the past week
- Vietnam’s economic growth counts on high-tech FDI
- ADB keeps Vietnam GDP growth forecast unchanged at 6.5%
- PM underlines importance of domestic science and technology market
- UKVFTA brings more investment to Vietnam real estate market
- Vietnam ranks 63rd out of 113 economies in new global index of digital entrepreneurship systems
- Danish workshop seeks ways to help Vietnamese firms climb up global value chains
- Quang Ninh’s Mong Cai city moves to develop renewable energy
- Insiders call for revision to draft on e-transactions
- ESG criteria is still a challenge for businesses
- Express delivery market may near $5bln by 2030