The Hongkong and Shanghai Banking Corporation (HSBC) expects Vietnam to regain its steady growth momentum, reaching 6.5 per cent in 2022 despite the Omicron variant creating many risks to both Vietnam and the world, according to its recently-released “Vietnam at a Glance” report entitled “Happy Ending to a Difficult Year”.

At the end of 2021, Vietnam posted fourth-quarter growth of 5.2 per cent year-on-year, which far exceeded market forecasts, according to the bank. In particular, manufacturing quickly improved while exports hit a record high, mainly thanks to strong increases in global demand for technology products and machinery.

In addition, the service sector started to recover, though unevenly across segments. While on-site service industries have benefited from the reopening of the economy, tourism-related industries remain rather bleak, with only about 15,000 tourist arrivals in December.

Production and exports are expected to continue to lead the way, thanks in part to stable FDI commitments. Domestic demand is likely to recover further as current restrictions are gradually lifted and the labor market recovers.

The biggest obstacle Vietnam needs to pay attention to, according to HSBC, is the ongoing fifth Covid-19 outbreak, especially the emergence of the Omicron variant. However, the country has a better vaccination program, which may help it avoid having to re-introduce social distancing on a large scale.

Another concern is inflation, mainly from rising transport costs. The bank forecasts 2.7 per cent this year; lower than the ceiling of 4 per cent set by the State Bank of Vietnam (SBV).

In the context of inflation unlikely to be a major concern for the SBV in 2022, the real estate market may attract more attention.