Vietnam’s back in full swing, but supply chain delays, inflation cap growth upside

VIETNAM’S economy is back on track for a strong recovery this year, but growth may be capped by disruption to supply chains and inflation, economists say.

John Paul Lech, portfolio manager at Matthews Asia, said: “Vietnam is a frontier market star. While it is often overshadowed by continental heavyweights China and India, or more established emerging markets such as Indonesia and Malaysia, Vietnam in our view is one of the best structural growth stories in the developing world.”

While frontier markets are generally smaller, less liquid and have limited foreign investor access, Vietnam has bucked the trend. For the first six months of 2022, foreign direct investment (FDI) into Vietnam rose almost 9 per cent to US$10.1 billion.