Rapid economic recovery in Vietnam and Southeast Asian countries

International Business News  –  The COVID-19 outbreak and the Russian-Ukrainian conflict come at a time when Southeast Asian countries are playing a bigger role in global production lines and supply chains. However, rising inflationary pressures could weigh on trade activity and derail the growth train in Southeast Asia’s generally sturdy economies.

Southeast Asia is an important part of global production and supply chains, especially for the global electronics industry, said S&P Global Market Intelligence’s Asia-Pacific chief economist. Due to the disruption of the supply chain of the global electronics industry during the epidemic and the delay in the delivery of key components, various electronics companies have continued to diversify their supply chains in Southeast Asia.

Under the general trend of global supply chain adjustment and transfer, Vietnam has many advantages in taking advantage of the opportunities brought by the trend of supply chain transfer. In 2020, Vietnam has become one of the centers to welcome the wave of investment capital transfers from China as global companies accelerate the process of diversifying their supply chains. In 2021, despite being in the “vortex” of the epidemic, foreign direct investment (FDI) inflows to Vietnam will reach US$31.15 billion, a year-on-year increase of 9.2%.

This trend has helped strengthen Southeast Asia’s role in global supply chains, bringing ample funding and opening up new job prospects after two years of disruption due to the impact of the pandemic. At the beginning of the year, various forecasts for economic growth in the Southeast were more optimistic.

Statistics show that, thanks to the recovery of domestic consumer demand and the gradual relaxation of epidemic prevention and control measures, Southeast Asian economies as a whole are still growing.

According to data from S&P Global Market Intelligence in June, the manufacturing industry in Southeast Asia has generally shown a solid growth trend. Southeast Asia is expected to be one of the fastest-growing regions in the world, said S&P Global Market Intelligence Chief Economist for Asia Pacific. Southeast Asia is also a major destination for foreign direct investment by multinational companies in the United States, the European Union and Northeast Asia.

As for Vietnam’s economy, Vietnam’s Central Institute of Economic Management (CIEM) has formulated two scenarios for economic growth in 2022. In the optimistic scenario, CIEM predicts that Vietnam’s economic growth rate in 2022 will reach 6.9%, higher than the 6.7% in the base case, and close to the government’s target of 7% growth this year.