Vietnam, considered by the world as a rising star in the Asian economy, faced significant setbacks at the beginning of 2023.
In 2022, many economists had high hopes for Vietnam’s development, even predicting that Vietnam could be the next Asian tiger after the Four Asian Tigers. In 2022, Vietnam achieved an impressive real GDP growth rate of 8%, the highest in 25 years.
After two years of silence due to the pandemic, the 8% growth rate undoubtedly indicated a remarkable comeback for Vietnam. According to World Bank data, Vietnam had maintained an average GDP growth rate of 6.8% for the thirty years before 2019.
Buoyed by the strong economic performance in 2022, Vietnam set a GDP growth target of 6.5% for 2023 at the year-end conference in November 2022.
However, despite the initial enthusiasm, Vietnam’s performance in the first quarter of 2023 fell short of expectations, with a GDP growth rate of only 3.3%.
It is worth noting that, excluding the years 2020 and 2021 affected by the pandemic, the last time Vietnam had an annual GDP growth rate below 4% was in 1987, according to the World Bank’s records.
Amidst the shock, economists could only lower their economic forecasts for Vietnam in 2023 with disappointment. The IMF revised down the GDP growth rate expectation for Vietnam to 5.8%, while the Oxford Economics Research Institute even lowered it to 4.2%, nearly half of the 2022 data.
It seems that despite being seen as a potential growth market, Vietnam has not fully managed to break free in the current global economic downturn.
Weak external demand, continued tightening of monetary and bond market policies, and the resulting contraction in the real estate industry have shattered the economic recovery that Vietnam had painstakingly built.