Taking Stock: Vietnam Economic Growth Update, January 2022

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Part I. Recent Economic Developments and Prospects

Vietnam had a turbulent year in 2021. Despite a strong start in the first semester, the COVID-19 outbreak in April derailed recovery and led to extensive human and economic costs. Vietnam’s economy is estimated to grow by 2.58 percent for the year.

Looking ahead, GDP is expected to rebound to 5.5 percent growth in 2022 in a scenario where the pandemic is under relative control both at home and abroad. The rebound of the economy will be supported by a more accommodating fiscal policy, at least in the first part of 2022.

In the medium term, full recovery of the economy to a pre-pandemic level is only expected in 2023, with the full recovery of domestic demand and barring new shocks.

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Part II. NO TIME TO WASTE - The challenges and opportunities of cleaner trade for Vietnam

As the Vietnam’s economy recovers from the COVID-19 pandemic and the authorities start to implement their new vision of a more sustainable development model, a critical question is how trade can be transformed to support this transition.

While the success in exporting goods has been a boon for the country in the past two decades, it has also brought challenges. The export sector (agriculture, manufacturing) has significant carbon footprint as it uses emissions and energy intensive technologies and transportation services, which itself is a main contributor to greenhouse gas emissions.

At the same time, global and domestic commitments to reduce greenhouse gas emissions are expected to affect both the supply of and demand for Vietnamese exports. On the supply side, the composition and value of Vietnamese exports have been and will be exposed to climate change impacts. On the demand side, Vietnamese exports will likely be subject to new demands by major trading partners and consumers for more environmentally conscious production processes and greener goods and services.

This part elaborates on how Vietnam’s can harness the impacts of climate change on its trade sector, addressing challenges and taking advantage of new opportunities in line with the new development vision for the next decade.

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