Despite the challenges ahead, Vietnam’s economy is still forecast to become among the fastest-growing in Asia-Pacific this year, according to VnDirect.

It has maintained its forecast of 7.1 per cent GDP growth for 2022. In the second quarter of the year, the service sector is expected to post an increase of 6.5 per cent year-on-year thanks to the resumption of services such as tourism, public transport, and entertainment, and a recovery in domestic demand. The agriculture, forestry and fisheries sector, meanwhile, is forecast to increase 2.1 per cent year-on-year. Rising input material prices, however, will have a strong impact on industry and construction.

The US Fed decision to raise operating interest rates, VnDirect believes, will have several major impacts on Vietnam’s economy, including reducing demand for the country’s exports, putting pressure on deposit rates, and influencing FDI attraction, among other things. However, it also believes that a strong domestic recovery would be a driving force in overcoming external challenges.

VnDirect forecasts inflation to stand at 3.1 per cent in the second quarter of 2022. It also forecast an annual rate of 3.45 per cent and said the government will control it at under 4.0 per cent, as it determined at the beginning of the year. The government is taking the measures necessary to curb inflation, including cutting the environmental protection tax on fuel to lower domestic gasoline prices and adjusting public service prices.