Economy forecast to grow 10% in Q3

05 Aug 2022

Vietnam’s economy will likely grow 10% year-on-year in the third quarter, fuelled by strong domestic consumption.

Chief economist at VinaCapital, Michael Kokalari stated that earnings growth is forecast to surpass 20% in 2022, as part of a report entitled ‘The divergence between Vietnam’s strong economy & weak stock market.’ The research outlines forecasts for the country’s economy in the last five months of the year, and highlights Vietnam’s solid economic performance.

Real retail sales – not taking into account the impact of inflation – rose by 7.9% year-on-year in the first half of the year. This soared to 11.9% between January and July, exceeding VinaCapital’s previous forecast of 7% year-on-year growth for 2022.

“This is important because we are often asked now whether the ongoing slowdown in the U.S. economy - which is Vietnam’s biggest export market - will weigh on Vietnam’s economic growth,” Kokalari said.

Furthermore, as the revenues and earnings of firms on Vietnam’s stock market are chiefly driven by the domestic economy, VinaCapital predicts the market will benefit from the robust domestic growth, Vietnam Plus reports.

Kokalari said the country’s stock market increased 37% in 2021, fuelled by a 36% rise in earnings. The report shows a forecast of 16% earnings growth in 2022, bolstered by robust economic growth.  

Although the Federal Reserve’s rate hike has impacted global stock market investors’ sentiment, Vietnam’s strong domestic economy is forecast to counter weak stock market sentiment in the U.S. and other markets. 

The principal reason for the weak sentiment among retail investors in Vietnam is the government’s crackdown on illegal practices by certain firms, that got underway in March.

"But we believe the government’s efforts to improve corporate governance and transparency will ultimately benefit Vietnam’s stock market, and the country as a whole,” Kokalari added.