Vietnam continues to be major link in global supply chain


According to experts of Standard Chartered, Vietnam still maintains its position as manufacturing central and important link in global supply chain even with the challenges in pandemic and geopolitical tensions.

In the newly published title “Vietnam’s economic recovery momentum to be stronger in Q2”, Standard Chartered bank forecasts Vietnam’s GDP growth rate up to 6,7% in 2022 when other economic factors showed signs of widespread recovery.

The recovery process is expected to be stronger in the end of Q2 of 2022 when domestic demands and tourism industry recover. However, Vietnam mays face challenges short-term risks, especially events that related to tourism recovery and pandemic.

Mr.Tim Leelahaphan – economic experts of Standard Chartered in Thailand and Vietnam shared that: “Vietnam government has removed quarantine restrictions for international tourist coming to Vietnam in March 2022. We assumed that tourism which contributed 10% of GDP will need more attention and assessment in Q2 after 2 years of lockdown”.

Experts from Standard Chartered Bank stated that FDI inflows into Vietnam have started to pace up this year after short decline in 2021. Standard Chartered expects this trend to continue, especially in such sectors as manufacturing and electricity, petroleum and air conditioning equipment supply.

“Foreign investors will continue to be the main driving force for Vietnam to contribute to the global supply chain. Many large technology enterprises in the world have moved or plan to move production from China to Vietnam in recent years in order to diversify their supply chains. Vietnam continues to be a regional manufacturing hub in areas such as electronics, textiles and footwear," said Tim Leelahaphan, economist in charge of Thailand and Vietnam, Standard Chartered Bank. 

Standard Chartered Bank maintains its inflation forecast for Vietnam at 4.2% for 2022 and 5.5% for 2023. Supply factors will bring risks of increasing inflation, especially with the current geopolitical tensions. In the medium term, factors affecting inflation originates from demand will increase when the economy recovers. 

Standard Chartered maintains a positive assessment of the Vietnamese dong (VND), thanks to the support of the balance of payments. Vietnam is likely to continue to run current account surplus this year as the tourism sector recovers, despite higher commodity prices. Standard Chartered predicts the USD-VND exchange rate to reach 22,300 by the end of 2022 and 22,000 by the end of 2023.


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