Vietnam’s economic recovery will rally in the near term, according to the Asian Development Bank’s (ADB) September report, due to robust domestic consumption, moderate inflation, improved trade activities and an acceleration of public investment.

During Q1 and Q2 this year, the country’s economic growth declined to 3.7%, which was not forecast earlier in the year. 

Nevertheless, ADB country director for Vietnam Shantanu Chakraborty has stated he remains confident Vietnam will reach overall annual growth of 5.8% for 2023, The Star reports. 

This is predominantly down to early indications of upticks in the services sector and construction. In addition, there is also growth in the agricultural sector. 

“So, there are some drivers of the economy that we believe will contribute towards Vietnam achieving its 5.8% economic growth, despite sluggishness in the first couple of quarters,” Chakraborty stated.

“I believe maintaining the momentum of public investment will be crucial because that is what is going to rejuvenate economic activity, generate employment, and put more money in the hands of people to enhance domestic consumption.

“The monetary and fiscal policies adopted by the government up until now have really facilitated keeping inflation under control. Our projection on inflation in Vietnam for now is 3.8% for 2023 and 4% for 2024,” he added.

“There are, of course, certain challenges in terms of the rising global interest rates, the disruptions caused by geopolitical events, and the monetary tightening in some countries.

“But overall, given the stability of agricultural production in the country so far, and the fact that oil and gas prices are expected to remain stable for the rest of the year, I strongly believe that, based on the low inflation rates that were experienced by Vietnam in the first half of the year, overall inflation of 3.8% is very much achievable,” he said.

Furthermore, the ADB said public investment is a crucial factor for Vietnam’s economic growth.

Estimates show around $30 billion of public investment has been planned to boost demand within the market, generate employment and promote overall economic activities.