(PLO)- Despite being assessed for good growth in 2022, Vietnam’s economy still faces many great challenges.
The economy of Vietnam (VN) has a high openness, so the fluctuations in the world economy also have a certain impact on the domestic situation. However, according to observations, investors still have many opportunities to find profitable items if they choose the right time and investment portfolio.
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Optimism in caution
The US Federal Reserve (Fed) has just raised interest rates to 0.75% to continue the policy of controlling inflation. The Fed’s message is that it will continue to sharply increase interest rates until the end of 2022.
MSc Phan Minh Hoa, RMIT Vietnam University, said the increase in interest rates led to the continued rise of the USD. In that context, policymakers need to keep a close eye on fluctuations. In addition to the impact on imports and exports, the appreciation of the dollar also puts pressure on inflation by increasing the prices of imported goods and financial markets by causing investors to withdraw capital from emerging markets.
Therefore, it is necessary to ensure a balance between the goal of economic growth and inflation control. At the Government meeting on September 22, Ms. Nguyen Thi Hong, Governor of the State Bank, said that in the context of currencies depreciating in many countries, the Vietnamese currency is the least devalued compared to the region and the world. The biggest challenge is still controlling inflation. This year, Vietnam’s inflation will be controlled below 4%.
This time is really not favorable for real estate and securities investors to make profits but only preserve capital.
In the context of many difficulties and challenges, the State Bank still persisted in solutions to pursue the goal of macroeconomic stability, closely following all developments for appropriate management.
A recent report by the Asian Development Bank (ADB) shows that Vietnam is facing complicated developments from the global economy. However, ADB also believes that Vietnam’s GDP will grow by 6.5% this year and 6.7% next year. With such a growth forecast, Vietnam will be the economy with the strongest growth in Southeast Asia in 2022 and 2023.
Contrary to the worried opinion, Associate Professor-Dr. Dinh Trong Thinh, a financial-economic expert, analyzed that the Fed’s interest rate hike was in the forecast, there was nothing to worry about. The Fed raises interest rates will increase the value of the dollar, attracting investment capital to the US. An increase in the value of the USD also reduces the value of other currencies in the world. However, this also depends a lot on the exchange rate management policy of each country.
Specifically, like Vietnam, the management of the exchange rate is still good and stable. Keeping the exchange rate of VND against USD stable is to help stabilize core inflation, thereby contributing to stabilizing commodity prices and ensuring low inflation.
“Vietnam has kept the exchange rate of the Vietnamese dong against the USD stable, and our import-export contract has 70% of it in USD. Keeping the exchange rate stable means keeping the import and export sector stable, “- Mr. Thinh said.
According to Mr. Thinh, Vietnam’s financial market remains stable, promoting investors to participate in Vietnam’s economy. New cash flow from foreign investors poured into the stock market, foreign direct investment capital still increased, showing that Vietnam is still a good destination for investors.
Gold is still a safe investment channel
Although stocks and real estate have high profit margins, it must be seen that the fluctuations of these two investment channels are also terrible, plus the disadvantage is that they depend heavily on macroeconomic policies. Meanwhile, gold is also affected by monetary policy, but not as much and directly as stocks or real estate. From now until the end of the year, gold is still a safe investment channel.
Economist TRAN THANH HAI, Chairman of the Board of Directors of Vietnam Gold Trading and Investment Joint Stock Company (VGB)
Real estate, securities?
Dr Dinh The Hien, an economist, director of the Institute for Informatics Research and Applied Economics, said that the Fed’s interest rate hike shows that financial costs will increase and fuel the dollar’s rise.
In principle, rising interest rates are not good for the world stock market, but Vietnam may not be affected strongly. The reason is that the Vietnamese stock market is not a market that is directly connected to some world financial markets under the influence of the Fed’s interest rates.
VN stocks are influenced by domestic investor sentiment and other supply and demand factors. Therefore, the Fed’s interest rate hike does not have much impact on this investment channel in Vietnam.
“This time is really not favorable for real estate and securities investors to make profits but only preserve capital. Real estate is having many reasonable adjustments in price, securities are also in the period of stabilization and restructuring.
Vietnam’s inflation is still lower than interest rates, which means that bank depositors are still positive, so at this stage, for most investors, the savings channel is safe and best in the last three months of the year. – Dr. Hien recommended.
Sharing the same opinion with Dr. Hien, the deposit channel is still safe, but according to Associate Professor Dinh Trong Thinh, the securities channel, real estate still has many opportunities.
Specifically, Mr. Thinh cited on September 16, 2022, the Government issued Decree 65 amending and supplementing a number of articles of Decree 153/2020 regulating the offering and trading of corporate bonds. ) individually in the domestic market and offering corporate bonds to the international market.
The main measure in the past time is mobilizing through the stock market, issuing additional bonds and corporate bonds. Decree 65, according to experts, opens up many opportunities for businesses to raise capital through bond issuance. Of course, this issue will require stricter requirements to ensure the bond market becomes the best source; while ensuring the interests and safety of securities in particular as well as the entire financial and monetary system of Vietnam in general.
“When enterprises have capital flow, promote production and business, and have a lot of growth potential, the opportunity for stock investors is still there in the long term. Some banks have opened credit room, which is also a signal to gradually warm up the real estate market” – Mr. Thinh shared.•
The task of stabilizing the exchange rate of VND against USD
VnDirect Securities Company assessed that the abundant state budget creates a lot of room for using fiscal tools (taxes and fees) to control inflation and stabilize the macro-economy. Thereby reducing pressure on monetary policy and maintaining the synchronization of monetary policy with the growth-supportive orientation of the current fiscal policy.
Thanks to the relatively abundant fiscal space, the Government has decided to reduce the environmental tax and the import tax on petrol to curb inflation. In addition, the larger budget allows the Government to accelerate the disbursement of the economic stimulus package in the last six months of 2022. This includes a 2% reduction in VAT and an additional interest rate compensation package worth VND40,000 billion. VND 113,050 billion worth of infrastructure development investment package. These policies will promote the recovery of the Vietnamese economy in the second half of 2022 and into 2023.
The exchange rate will continue to be under pressure in the final months of 2022 due to the high USD anchor as the Fed maintains its interest rate hike schedule. However, according to VnDirect, we see factors supporting the exchange rate, including stronger FDI inflows, improved trade surplus (forecast to reach about 8.9 billion USD in 2022), balance surplus payment, foreign exchange reserves reached the safe threshold, equivalent to 3.3 months of imports.
“Therefore, the USD/VND exchange rate will remain in the range of 23,300-23,500 by the end of 2022, corresponding to an increase of no more than 3% compared to the end of 2021” – VnDirect forecast.
The task of the State Bank at this time is to improve stability and maintain the position of the Vietnamese dong in the international arena. In which, the most important is to keep the exchange rate of VND against USD stable, or keep the slippage of VND against USD not exceeding 2%.
QUANG HUY – PHUONG MINH