In the latest World Bank (WB) report, Vietnam’s economy is to grow 5.3 per cent in 2022, down from 6.5 per cent last October. In the worst-case scenario, growth may fall to 4 per cent.

The forecast is based on the policy of living with Covid-19, sustainable growth in the export-oriented processing and manufacturing industry, and a recovery in domestic demand.

The service sector is expected to recover gradually as consumer trust is restored, and international tourism is expected to be in better shape from mid-2022. Export turnover of processed and manufactured goods is to increase at a slower pace as growth in key export markets such as the US, the EU, and China slows down.

Vietnam will face various obstacles, including the Omicron variant and rising prices for oil and steel. It will also face increasing negative risks, slowing growth in its main trading partners, and a trade exchange rate shock.

WB researchers said that because the economy has recovered strongly since the beginning of the year, if the government deploys a strong support package with fiscal policies, the negative impact on growth could be mitigated. They also said the country needs to be more cautious when considering the financial system.