Vietnam Macro Monitoring, October 2022

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This brief focuses on the economic development in Vietnam as of October 2022. Vietnam’s economy registered a strong growth of 13.7 percent (y/y) in Q3-2022 and 8.9 percent (y/y), mostly reflecting a low base effect. Industrial production and retail sales posted another month of high growth rates (13.0 percent (y/y) and 36.1 percent (y/y)), which could be attributed both to strong economic activities and to the low-base effects. Both exports and imports growth moderated in September 2022 due to weakening demand from major export markets. FDI commitment fell in September affected by the heighted uncertainty about the global economic prospects while FDI disbursement continued to improve. While the economic recovery has remained strong, heightened uncertainties related to the slowing global economy, rising domestic inflation, and tightening global financial conditions warrant increased vigilance and policy agility. Given the economy has not fully recovered and growth in main export markets is expected to slow, continued active fiscal policy to support the economy should be closely aligned with economic outcomes and coordinated with monetary policy. At the same time, as CPI and Core CPI are reaching 4 percent, the policy rate set by the authorities, monetary authorities should be ready to considerfurther tightening of monetary policy to ensure inflation remains anchored. Given the end of forbearance and tightening financial conditions, the financial sector faces heightened risks and prompt SBV guidance would help stem materialization of such risks at the sector level, potentially affecting the real economy. The recent turmoil around the Saigon Commercial Bank (SCB) case highlights the need for increased transparency through timely publication of detailed information about the banking sector performance, an enhanced corporate governance, a strengthened risk-based supervision, including supervision of business groups and related party lending and early intervention, and an enhanced bank resolution framework.
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World Bank. 2022. Vietnam Macro Monitoring, October 2022. © Washington, DC: World Bank. License: CC BY 3.0 IGO.
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