Hanoi (VNA) - Vietnam’s economy shouldget back to GDP growth of 6.8 percent next year, which will be driven by areturn of strong foreign direct investment (FDI) into the market, mainly focusing on themanufacturing sector, CEO of HSBC Vietnam Tim Evans has said.

This would benefit Vietnam's exports, especially as freetrade agreements that have been signed over the past two years start to bearfruit, according to the CEO.

The continued expansion of the middle class and inparticular the rising affluent sector will lead to changes in consumption asVietnamese start spending more and more on leisure and travel.

Infrastructure roll-out will also continue to fueleconomic activity especially in the renewable/green arena given the strongambitions made by the Vietnamese Government following the recent 26th UnitedNations Climate Change Conference of the Parties (COP26) in Glasgow, the UK.

Meanwhile, the World Bank (WB) said in the Decemberedition of its Vietnam Macro Monitoring that Vietnam’s economic conditionscontinued to improve, with both industrial production and retail salesregistered a third month of growth.

Merchandise exports hit a record high of 31.9 billionUSD, helping maintain a second consecutive month of trade surplus while FDIcommitment recovered after a brief dip in October, according to the report.

Inflation ticked up due to fuel price hikes,recovering non-food domestic demand and rising logistic costs while creditgrowth remained stable, providing amble liquidity to support the economyrecovery. After two months of decrease, the Consumer Price Index (CPI)increased by 0.3 percent month-on-month in November.

Compared to a year ago, the CPI rose by 2.1 percentyear-on-year, slightly higher than in October, but well below the 4.0 percenttarget set by the State Bank of Vietnam.

The government continued its contractionary fiscalstance as the budget balance posted another month of surplus, driven by strongrevenue collection, the report noted.

The policy of “living with COVID-19” will involvecontinued vigilance and fast action by the authorities, both in vaccination andin social distancing, testing, and quarantining. There is also clear need forfiscal policy support to boost private demand and help the domestic economyrecover. Providing financial assistance to impacted workers and householdswould be an essential avenue to achieve this objective, according to thereport.

Given the available fiscal space, and difficultiesregistered in implementing the budget in 2021, another policy option forconsideration is a reduction in the value-added taxes for 2022 to supportprivate consumption./.