In its recently-released report on Vietnam’s macroeconomic outlook, VnDirect predicts the economy can overcome external challenges and achieve a higher growth rate in the second half of the year.

It forecasts growth of 7.8 per cent year-on-year in the closing six months, for annual growth of 7.1 per cent.

The main drivers are the low base in the third quarter of 2021, when Vietnam’s GDP fell 6.0 per cent year-on-year, the reopening of non-essential services, including public transport, tourism and entertainment, new economic stimulus packages, the recovery of FDI inflows after the reopening of international commercial flights, and strong export activity.

Inflation, meanwhile, will continue to increase in the second half due to the recovery of domestic demand, while gasoline prices will remain high and rising input material prices will lead to higher domestic production costs, the report also pointed out.

There is not much room left for the State Bank of Vietnam (SBV) to continue loosening monetary policy to support the economy. However, it will make efforts to maintain an “appropriate” monetary policy and not tighten it immediately to support economic recovery and stabilize the market.

VnDirect also noted that domestic demand is still weak and has not fully recovered to pre-pandemic levels, and the SBV still prioritizes its goal of maintaining low lending rates to support businesses and economic recovery.