Vietnam: 2022 Article IV Consultation-Press Release; Staff Report, and Statement by the Executive Director for Vietnam

This 2022 Article IV Consultation discusses that Vietnam entered the pandemic with robust economic growth and sound fundamentals. Prudent policies resulted in a prolonged period of high growth, price stability, and low public debt ratios. Strong foreign direct investments and trade flows boosted external buffers while banks entered the pandemic in a relatively strong position. The government’s new support package presents an opportunity to entrench the recovery, mitigate the scars of the pandemic, and deliver sustained and inclusive growth. In view of the strong but uneven recovery and heightened uncertainty, policymaking should be agile, and the size and composition of policy support calibrated to the pace of the recovery and downside risks. The report suggests that monetary policy should be increasingly focused on rising inflationary risks, while allowing for greater exchange rate flexibility. Reforms to modernize the monetary policy framework should continue. In order to bolster long-term growth and convergence, the authorities should decisively tackle pervasive economic dualism and boost productivity, focusing on improving the business environment, strengthening governance, reducing corruption, alleviating labor skill mismatches, and improving labor force quality.