The Asian Development Bank (ADB) has released a report that forecasts Vietnam to have the highest growth rate in Southeast Asia in 2022. This is great news for the country, which has been struggling with economic uncertainty in recent months as lockdowns have taken their toll on every industry.
But despite these challenges, Vietnam’s economy is expected to grow by 6.5% in 2022 — and businesses in the wider ASEAN region should take notice. It should be noted, however, that not all industries will see equal growth — some will flourish, and others may still experience some instability. Let’s take a look at some of the major Vietnamese industries, and how they are projected to grow as we progress through 2022 and beyond.
Vietnam’s Strengthening Dong in 2022
The State Bank of Vietnam (SBV) had been in some hot water with the United States Department of the Treasury in recent years, accused of currency manipulation in order to gain unfair advantages in exporting power.
The two countries have since come to an agreement in the middle of 2021, where SBV said it would "avoid manipulating its exchange rate in order to prevent effective balance of payments adjustment or to gain an unfair competitive advantage and will refrain from any competitive devaluation of the Vietnamese dong".
This ensured Vietnam escaped the United States Department of the Treasury’s threats of disciplinary tariffs on exports to the United States. Since then, the Dong has strengthened against the Greenback as confidence returned to Vietnam’s export capabilities, and that is expected to continue through 2022 and beyond.
Vietnamese Digital Sector Boom
With millions of people stuck at home, the Vietnamese digital sector, like all digital sectors around the world, saw an excellent year in revenue for 2021. It’s not just spending that was up either — total investment for tech startups in Vietnam was valued at US$1.3 billion, more than triple the US$364 million recorded in 2020.
It’s thought that Vietnam’s digital economy as a whole will grow to US$220 billion by 2030, so expect to see very healthy business growth for some time to come.
Vietnam’s Fintech Sector Heating Up
Thanks to the pandemic and the crippling lockdowns brought on as a result the average Vietnamese consumer switched from the traditional use of Cash to purchasing goods and services via digital transactions. It is reported that Vietnam’s fintech transactional value will hit USD2,738 Million and involve over 70.9Million users in the year 2025. This is up from 51.78 million users reported in the year 2021. Specific examples of fintech startups that are paving the way to transform the payment sector in Vietnam include the following e-payment platforms: Momopay, Zalopay, Moca, and Payoo.
The Logistics Industry in Vietnam – Boosting Growth
Vietnam is set to be one of the top 10 rising supply chain markets, globally. This is due to a few factors, according to supply chain experts, it comes down to three important factors which give Vietnam a competitive advantage over its neighboring countries: 1) A unique geographical location, with a long coastline next to china & major shipping lines 2) Major supply chains moving out of China as a result of the trade war and pandemic restrictions. 3) New trade deals with many countries including, recently, economic superpowers the United Kingdom and the European Union. This is combined with a rapidly expanding middle-class and a manufacturing sector that is proving to rival that of China and India.
Vietnamese Manufacturing Sector Outlook for 2022
2021 was the year of the supply chain crisis for not just Vietnam, but Southeast Asia as a whole. Many major companies looked to diversify supply chains, in an effort to hedge their bets against mass lockdowns and production uncertainties. Samsung is just one example, moving operations in India and Indonesia to combat production downtime.
As lockdowns slow down, and supply chains speed up, the Vietnamese manufacturing sector is expected to rebound in 2022. Add to this the continued growth of the middle class (expected to be 396 million people-strong by 2030).
What Does Vietnam’s Growth Mean for ASEAN?
The growth of the Vietnamese economy is good news for businesses in the ASEAN community. With Vietnam leading the pack, businesses can be assured that this growth in business in many areas is sustainable and will continue into the future. Furthermore, as Vietnam’s digital sector continues to grow, businesses in the ASEAN community can expect to see increased revenue from e-commerce and online sales.
Looking forward, Vietnamese businesses should continue to focus on diversifying their supply chains, in order to remain competitive as the global economy changes. Additionally, businesses should focus on expanding their digital presence in order to reach the millions of consumers who are now spending more time online. With a population of over 650 million people and a rapidly-growing economy, the ASEAN market is ripe for business expansion. Thanks to Vietnam’s growth, businesses in the region now have a strong image of how to build their success in 2022 and beyond.
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FAQs
What is the economic situation in Vietnam currently?
- Vietnam’s 2022 prospects remain promising, with the nation leading all other ASEAN members in growth.
Why is Vietnam growing so fast?
- Vietnam’s accelerated growth is likely due to a combination of factors. The digital revolution, strengthening national currency, and the rise of a middle class with disposable income have all contributed to this growth.
What are the biggest growing industries in Vietnam?
- Vietnam has several rapidly growing and developing industries. Some dynamic industries to note are manufacturing, fintech, and digital e-commerce.
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