The economy is returning to its long-term growth trajectory now that the post-COVID re-opening boom has finished, Kokalari said in a note titled ‘Looking ahead at 2023’.
The Vietnamese government aims to raise infrastructure spending from 4 per cent of the GDP in 2022 to 7 per cent of the GDP this year, which would help support the country’s long-term economic growth, Kokalari added.
Investment management firm VinaCapital expects Vietnam’s economy and stock market to normalise this year following the pandemic. Vietnam’s GDP growth will slow from 8 per cent last year to 6 per cent this year, weighed down by the slowing demand for Vietnamese products from consumers in the US and the EU, said VinaCapital chief economist Michael Kokalari.
This new infrastructure is needed to help ensure that FDI inflows continue to flow into Vietnam for years to come, according to the economist.
Regarding domestic consumption, he said, the growth of Vietnam’s middle-class is driving reliable growth in the demand for products and services those consumers desire, which benefits consumer discretionary companies.
The value of the Vietnam dong depreciated by 3 per cent in 2022 as compared with 7 per cent average depreciation for Vietnam’s regional emerging market peers last year, and VinaCapital expects the VND to appreciate by 2-3 per cent this year, a news agency reported.
VinaCapital expects the government to take steps to ease the liquidity issues affecting the country’s corporate bond market, which would result in a resumption of Vietnamese companies’ ability to refinance their maturing debts.
Fibre2Fashion News Desk (DS)
