Vietnam pulls off Asia's fastest growth as economy powers on

The economy of Vietnam grew at the fastest pace in Asia in 2022, with an 8.02% growth recorded, according to a Bloomberg report.

The gross domestic product growth rate was faster than the government's initial target of 6%-6.5% growth and was aided by a quicker-than-expected 5.92% expansion in the final quarter.

The industrial and construction sectors grew 7.78% in 2022, while the services sector expanded 9.99% and the agricultural sector grew 3.36%, Reuters reported, citing the General Statistics Office (GSO) report.

Exports in 2022 were up 10.6% to $371.85 billion, while retail sales rose 19.8%, the GSO said, and consumer prices in December rose 4.55% from a year earlier.

Vietnam's central bank may now take its time before deciding to change its monetary policy away from tightening thanks to the better-than-expected performance.

Although the authorities increased the benchmark rate by 200 basis points in two steps this year, to 6%, there is cause for concern about a growth slowdown like to what happened in China due to potential debt default in Vietnam's property industry.

Vietnam's Economy Posts Asia's Fastest Expansion

GDP Growth in %

Infograph: TBS

While Vietnam "is performing well amid uncertainties in the global economy, risks to the economic outlook have become elevated," the Asian Development Bank said in a statement on 14 December.

"Though trade continues to expand, signs show weakening global demand for the country's exports," it said.

Exports decreased 14% year-over-year to $29.66 billion in December, while imports dropped 8.1% to $29.16 billion. As enterprises reduce their purchases of production materials and equipment, a fall in imports may predict a future contraction in industrial output.

GDP growth in the fourth quarter was 5.92%, slowing from a growth of 13.71% in the third quarter, the GSO said. Third quarter growth was revised up from 13.67%.

Foreign direct investment (FDI) into Vietnam, one of the country's key economic driver, rose 13.5% this year to $22.4 billion, according to the government. But FDI pledges, which indicates future inflows, dropped 11% in the year to $27.72 billion.

Vietnam is targeting GDP growth of 6.5% and inflation at 4.5% for next year.