SSI Research gives three growth scenarios in 2023, according to which economic growth is projected at 6-6.2% in the baseline scenario.

In the recently released 2023 strategy report, SSI Research expects GDP growth this year to be around 6-6.2%. In which, the Government will continue to pursue an expansionary fiscal policy (through accelerating disbursement of public investment and the Economic Recovery and Development Program 2022-2023) and the State Bank of Vietnam has a more flexible monetary policy compared to 2022.

Specifically referring to each growth scenario, in the positive scenario, the analysis assumes a soft landing for the global economy, the Russia-Ukraine war ends in 2023, and China completely abandons the  Zero-COVID policy. Domestically, the expansionary fiscal policy is effectively used in 2023. In this scenario, economic growth is projected to be over 7%.

The baseline scenario assumes a hard landing for the global economy (but not with a prolonged recession). Although geopolitical uncertainties may subside, the Russia-Ukraine war could continue in many forms. China completely abandons the Zero-COVID policy. Domestically, fiscal policy and support packages are disbursed relatively well. With this scenario, the economy is projected to grow 6-6.2%.

The less optimistic scenario assumes a hard landing for the global economy and a longer recession. Geopolitical instability is severe and takes more time to resolve. Domestically, difficulties in disbursing public investment continue to persist in 2023. At this context, economic growth is projected in the range of 4.5-5%.

According to SSI, in 2023, Vietnam has plenty of room to boost domestic demand through fiscal stimulus measures thanks to the public debt structure still being controlled at a reasonable level (public debt in 2023 is estimated to reach 45% of GDP, lower than the government's ceiling of 60%.).

China's reopening after 3 years of COVID closure will certainly have a positive impact on Vietnam's economic activities, such as the export and tourism industry.

Kylie Nguyen