In its recent Vietnam at a Glance report for July, HSBC adjusted its 2022 growth forecast up to 6.9 per cent from 6.6 per cent and downgraded its 2023 forecast to 6.3 per cent from 6.7 per cent.

With stability seen in the two quarters since it reopened, the recovery of Vietnam’s economy continues to be an outstanding example in the region. GDP growth in the second quarter hit 7.7 per cent year-on-year; exceeding market expectations. This was also the highest quarterly GDP growth Vietnam has posted since 2011, thanks to strong recovery in a wide range of sectors.

In particular, the service sector made significant progress. Thanks to the lifting of domestic and international travel restrictions in mid-March, tourism-related sectors, especially transportation and accommodation, have begun to flourish. Tourism is also developing strongly now that the summer season has arrived.

Meanwhile, retail sales in the second quarter grew 17 per cent year-on-year; a sign that household consumption has recovered.

In addition to domestic demand recovering, Vietnam’s production has regained its leading position, with all indicators pointing to stable production growth. Thanks in part to a favorable base effect, industrial production in the second quarter increased more than 25 per cent year-on-year. HSBC believes that this is largely due to the continuous export of electronics. Exports overall achieved impressive growth in the second quarter, of more than 20 per cent year-on-year.

HSBC also noted that although price pressure is not as obvious in Vietnam as in other regional countries, inflationary pressure is still rising rapidly. There are also signs that inflation has begun to spread. Core inflation was 2 per cent year-on-year for the first time in nearly two years, as domestic demand continued to grow.