Projected GDPs for ASEAN+3 countries. Vietnam is forecast to be the second fastest-growing economy in the region this year. (Photo amro-asia.org)Specifically,the country was projected to achieve a growth rate of 6.3% this year and 6.5%next year, well above the region-wide figures which were estimated at 4.3% and4.9% respectively.
Compared to the previous update, Vietnamese growth rates were revised downwardsto reflect the lower growth forecasts for China and the US, its major tradepartners. The country was expected to top the list with growth rates of 6.5%and 7.0% in the April update.
“Vietnam is a much more open economy and very exposed to the US andChinese economies. Because we are expecting reductions in growth rates inthese countries and the expected slowdown would affect its external demand, wehave to shift down projected growth rates for Vietnam," said HoeEe Khor, chief economist of the ASEAN+3 Macroeconomic Research Office(AMRO).
The Russian militaryoperations in Ukraine have been pushing up commodity pricesand global inflation. Relentless cost-push pressure, coupled withfirming domestic demand, is expected to drive regional inflationhigher this year, at 5.2%.
Regional inflation is projected to moderate to 2.8% in 2023 as tightmonetary policy taken by various economies will take effect and thepandemic is showing signs of receding.
AMRO expects that Vietnam will keep inflation rates well below 4% bymeans of price control. It estimates the figures at 3.5% in 2022 and 3.3% in2023.
"Vietnam has a fiscal base to be able to keep prices down and affordsubsidies for now. At the same time, it can also use fiscal policy tostimulate the economy. There is a need for infrastructure investments in thecountry, so it can pump prime the economy to make domestic demandstronger," the chief economist added.
A sharper deceleration in China's consumption and realty activities, accordingto AMRO, would significantly drag down the economy, with spillovers thatwould further undermine regional outlook.
Additionally, mounting prices in the US have caused the Federal Reserve toadopt contractual monetary policy at a faster pace than expected, raisingconcerns of an imminent recession. Financial investors have switched to safeassets and risk aversion has spiked, leading to capital outflows from emergingmarkets.
"Navigating this formidable environment, ASEAN 3 policymakers are nowfacing difficult policy trade-offs as they balance the need to sustain thegrowth momentum while containing the inflationary pressure," Khoradded.
Japan, the Republic of Korea and Myanmar are expected to enjoy growthrates of less than 3% this year, whereas Vietnam and the Philippines will beriding high with growth rates of over 6%. The other eight countries fallbetween 3 and 6%.
Regarding inflation, China and Japan are expected to do well with inflationrates kept under 3% in 2022. Meanwhile, Thailand, Myanmar, Laos andCambodia will have their rates surpass 6%. The other seven countriesfall between the two ends./.
Regional inflation is projected to moderate to 2.8% in 2023 as tightmonetary policy taken by various economies will take effect and thepandemic is showing signs of receding.
AMRO expects that Vietnam will keep inflation rates well below 4% bymeans of price control. It estimates the figures at 3.5% in 2022 and 3.3% in2023.
"Vietnam has a fiscal base to be able to keep prices down and affordsubsidies for now. At the same time, it can also use fiscal policy tostimulate the economy. There is a need for infrastructure investments in thecountry, so it can pump prime the economy to make domestic demandstronger," the chief economist added.
A sharper deceleration in China's consumption and realty activities, accordingto AMRO, would significantly drag down the economy, with spillovers thatwould further undermine regional outlook.
Additionally, mounting prices in the US have caused the Federal Reserve toadopt contractual monetary policy at a faster pace than expected, raisingconcerns of an imminent recession. Financial investors have switched to safeassets and risk aversion has spiked, leading to capital outflows from emergingmarkets.
"Navigating this formidable environment, ASEAN 3 policymakers are nowfacing difficult policy trade-offs as they balance the need to sustain thegrowth momentum while containing the inflationary pressure," Khoradded.
Japan, the Republic of Korea and Myanmar are expected to enjoy growthrates of less than 3% this year, whereas Vietnam and the Philippines will beriding high with growth rates of over 6%. The other eight countries fallbetween 3 and 6%.
Regarding inflation, China and Japan are expected to do well with inflationrates kept under 3% in 2022. Meanwhile, Thailand, Myanmar, Laos andCambodia will have their rates surpass 6%. The other seven countriesfall between the two ends./.
VNA
