According to the General Statistics Office (GSO), Vietnam’s GDP in the second quarter grew by 7.72 percent year on year and GDP in H2 by 6.42 percent. The economy is showing signs of a strong recovery. Experts give optimistic predictions about Vietnam’s economy, saying the growth rate will be 6.5-7 percent this year.

Do Bao Ngoc, deputy CEO of the Vietnam Construction Securities JSC, said Vietnam’s economic panorama in the first six months of was much brighter than the rest of the world. The inflation rate was only 2.4 percent, still far from the maximum 4 percent set by the National Assembly and much lower than the 8-10 percent in many countries.

Thai Pham, founder of Happy Live Securities, said that the global economy is in a negative status with escalating inflation due to the Russia-Ukraine conflict and the result of monetary policies pursued by the US Federal Reserve (FED) and central banks since 2020. 

Tightening monetary policy to control inflation may curb the GDP growth rate at 2.9-3.1 percent. However, amid the slow growth of China and G7, there are still good signs from ASEAN countries, including Vietnam.

Vietnam has contained the pandemic and recovered production. The World Bank predicts that Vietnam will obtain a GDP growth rate of 5.8 percent in 2022. The International Monetary Fund (IMF) predicts a 6 percent growth rate and Asian Development Bank (ADB) 6.5 percent.

Thai Pham said that with the high growth rate of 7.72 percent in Q2 and the low starting point in 2021, the 6.5 percent GDP growth rate is attainable in 2022. He believes that with an inflation rate lower than the rest of the world in the first half of the year, Vietnam will keep inflation below 4 percent this year.

Vietnam’s internal strength is expected to be much better than 2008, with forex reserves of roughly $100 billion. The country is witnessing a trade surplus and the State Bank of Vietnam is taking action to withdraw money from circulation.

Maybank Vietnam has raised its forecasted GDP growth rate to 6.9 percent in 2022 from the previous 5.8 percent. The inflation rate is expected to be 3.7 percent.

According to IMF, it will take Vietnam four more years to surpass Indonesia in GDP per capita. It is expected that as of 2026, Vietnam’s GDP per capita would reach $6,140, after Singapore, Malaysia and Thailand. Regarding GDP size, Vietnam would rank 33rd by 2025, after Indonesia and Thailand.

Securities on downward trend

However, experts point out that the Vietnamese stock market bears a lot of pressure. The market may recover in the short term after declines in the last three months, but it may continue falling in the medium term.

Ngoc said that Vietnam’s economy was better than much of the world in H1, but Vietnam’s stock market also fell rapidly as did the world’s stock market.

According to CSI’s Research Center, the VN Index fell from 1,530 points in January 2022 to 1,197.6 points in late June, which meant a 22 percent decrease. The HNX Index also decreased by 41 percent compared with earlier this year and by 45 percent compared with the peak.

The price-to-earnings ratio (P/E) was 12.81x on June 30, or 18 percent lower than the average P/E in the market. However, liquidity was low with a decrease of 30-35 percent in the last three months compared with the average level of 2021.

In the long term, CSI believes that Vietnam’s securities will increase in accordance with the rise of the economy.

In the short term, after three months of falling by 20 percent from the peak, the stock market may recover, reaching 1,265 points, or even 1,285 points, but may fall again later.

Experts have recommended investments in certain business fields, including electricity, energy, seaports, insurance, technology, oil and gas, and aviation because of high oil prices, the opening of many economies, and interest rate increases. 

Interest rates are expected to increase in the time to come, but this won’t affect the market.

M. Ha