Overview Of Economic Situation In 2021 And Trend In Investment In Vietnam In The Upcoming Year

In 2021, the 4th outbreak of the disease has significantly affected the economy and investment in Vietnam. The World Bank believes that GDP growth for the whole year 2021 is about 4.8%, lower than predicted at the end of 2020. Supply chains, industrial park activities are disrupted, many factories had to suspend production. According to economic expert Vo Tri Thanh, the potential growth is 3-4% for the whole year if the pandemic is well controlled and vaccination helps achieve community immunity.

It is forecasted that in 2022, Vietnam will not have a large-scale lockdown, the economy and investment in Vietnam will recover. Vietnam's GDP is predicted to grow by 6.5% by World Bank. The strong recovers will take place in the manufacturing and personal consumption sectors. In addition, the pandemic has also accelerated businesses to digitally transform and apply technology to adapt to the new period. The following article provides an overview of the economic situation in 2021 and forecasts the investment trends in Vietnam in 2022. 
 

1. Overview of the economic situation in 2021

According to the General Statistics Office, reporting on the social-economic situation in the third quarter, as of the first 9 months of 2021, GDP increased by 1.42% compared to the same period in 2020. The social distance due to the Covid pandemic has caused many difficulties in business activities, leading to a significant decrease in the total GDP of the industry, such as the GDP of accommodation and F&B sector decreased by 23.18% down,  the wholesale and retail sector decreased by 3.1% down. However, many industries recorded a stable increase such as the health sector increased by 21.15%, the export of goods and services increased by 14.21%, the import sector increased by 18.46%, the industry and construction sector increased by 3.57%. Meanwhile, the processing and manufacturing sector increased by 6.05% and is considered as the growth engine of the whole economy.
Regarding investment in Vietnam, foreign direct investment capital in 9 months reached 13.28 billion USD, down 3.5% over the same period last year. However, according to the Foreign Investment Agency, after the pandemic is controlled, the government strengthens policies to support and encourage investment, foreign direct investment enterprises still have optimistic predictions about business activities soon. About 79.4% of enterprises forecast their production and business situation in the last months of the year better than in the previous 9 months.

2. Trends of investment in Vietnam in 2022

Foreign enterprises promote investment in Vietnam, especially enterprises that have advantages in technology as well as digitized business processes. Accordingly, this facilitates investors to participate in operating and managing business activities remotely. In addition to investing in new projects, business mergers and acquisitions (M&A) are expected to be active again in 2022. Linking and joint venture activities, creating benefits for both sides are the new trend of M&A during the pandemic to increase the value chain instead of mergers and acquisitions like before.

In the next year, the capital flows of foreign direct investment in Vietnam tend to increase. The reason is that enterprises in China face supply chain difficulties due to the US sanctions on technology enterprises and the prolonged pandemic situation, while the demand for computers and electronic appliances always rising. Vietnam has the advantage of policies to support FDI enterprises, and the ability to connect to the global supply chain, which is an attractive location for investors in the Asian market.

Accordingly, thanks to the government's plan to strengthen infrastructure development, industrial real estate has the opportunity to break through in 2022. The demand for industrial land, logistics warehouses, and ready-built factories will increase sharply in 2022. The opening of international airports promises to create resilience for the industries' development and attract more investment in Vietnam. According to the survey, enterprises in the processing and manufacturing industry activities are being optimistic, about 73.7% of enterprises thought that the operation situation would be stable and grow again after the pandemic.
WHA is a Thai investor currently managing WHA Industrial zone 1 - Nghe An, providing comprehensive and timely industrial zone solutions for businesses recovering from the pandemic as well as new businesses established in the field of production and processing. With experience in building and deploying professional solutions, grasping trends of investment of businesses, WHA optimally supports the businesses to be rest-assured for investment in Vietnam.