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ADB: Vietnamese economy to be the fastest growing in Southeast Asia

Malie Nguyen Malie Nguyen

Dieuhuong270198@gmail.com

April 28, 2021 | 16:23

The Vietnamese economy will be the fastest-growing in Southeast Asia this year at 6.7 percent driven by a manufacturing recovery and boom in trade.

Economic institute anticipates 6.3% GDP for Vietnamese economy in 2021 Economic institute anticipates 6.3% GDP for Vietnamese economy in 2021
UOB: Vietnamese economy predicted to post 7.1% GDP growth in 2021 UOB: Vietnamese economy predicted to post 7.1% GDP growth in 2021
Vietnamese economy continues to reboot during first months of 2021 Vietnamese economy continues to reboot during first months of 2021

The regional average will be 4.4 percent, a report released Wednesday by the Asian Development Bank (ADB) forecast.

Vietnam’s GDP growth is expected to top 7 percent next year, also the highest in the region, which would average 5.1 percent.

"Stagnant domestic consumption and weak external demand caused by the Covid-19 pandemic slowed down Vietnam’s economy last year, but the growth momentum remains strong this year and next, made possible by Vietnam’s success in controlling the spread of the virus," ADB country director for Vietnam, Andrew Jeffries, said.

ADB: Vietnamese economy to be the fastest growing in Southeast Asia
Workers arrange steel structures at a construction site in the southern province of Dong Nai. Photo by VnExpress/Phuoc Tuan.

Growth would be boosted by export-oriented manufacturing, increased investment, and expanding trade, the report said.

The country’s purchasing managers’ index rose to 53.6 in March, the highest since January 2019. A rate of over 50 indicates expansion.

Construction is expected to pick up quickly as the government continues to accelerate major infrastructure work this year and low-interest rates stimulate property development.

Faster-than-expected recovery in China and the U.S. would significantly expand Vietnam’s trade and growth prospects, the report said.

China, whose GDP is set to grow by 8.1 percent this year, in the first quarter surpassed the E.U. to become Vietnam’s second-largest export market behind the U.S, it said.

Vietnam’s retail sales rose 5.1 percent in the first quarter, indicating a recovery in consumer confidence.

ADB: Vietnamese economy to be the fastest growing in Southeast Asia
A container ship docks at the Cat Lai Port in HCMC. Photo by Shutterstock/Xuanhuongho.

Increased domestic consumption, along with rising international oil prices, is expected to push inflation up to 3.8 percent this year and 4 percent in 2022, the report said.

Jeffries said: "But significant risks remain this year and next, including the emergence of new coronavirus variants and a delay in the government’s vaccination plan."

The report warned that the uneven global Covid vaccine rollout could delay Vietnam’s return to its strong pre-pandemic growth path, given its reliance on external trade.

Vietnam could maintain inclusive growth by softening the pandemic’s impacts on poverty and incomes, it added.

A study by the ADB found that the pandemic has reduced Vietnamese people’s incomes by 9.8 percent on average.

The bank urged the government to adopt a sustainable long-term strategy to help poor and vulnerable people diversify their livelihoods through measures such as vocational training and improved access to microfinance for starting businesses.

The International Monetary Fund (IMF) recently also forecasted that the Vietnamese economy will expand by 6.5% in 2021, followed by an acceleration to 7.2% in 2022.

The projections were made in the World Economic Outlook report released at the Spring Meetings of the IMF and the World Bank.

According to the IMF, Vietnam can achieve a growth rate of 6.5% this year thanks to its solid foundation as well as the government’s aggressive economic and healthcare measures.

Vietnam’s unemployment rate is projected to fall from 3.3% in 2020 to 2.7% in 2021 and down to 2.4% in 2022.

The Fund recommended that Vietnam should continue its current macroeconomic policies to ensure a sustainable and comprehensive recovery.

In Southeast Asia, the average growth of the five countries of Indonesia, Malaysia, the Philippines, Thailand, and Vietnam is expected to reach 4.9% in 2021 and 6.1% in 2022.

The global growth forecast has also been revised up to 6% from the 5.5% projection made in January.

GDP during the initial quarter of the year is estimated to have recorded an increase of 4.48% compared to the same period from last year, according to data released by the General Statistics Office (GSO) at a press conference held on March 29 in Hanoi.

The industrial and construction sector also recorded an increase of 6.3%, while the processing and manufacturing sector continued to represent the driving force for the national economy with a stellar growth rate of 9.45%.

Furthermore, the service sector enjoyed a growth rate of 3.34%, constituting approximately 35.7% of general growth, the wholesale and retail sectors saw growth of nearly 6.5%, whilst the finance and banking sector saw a rise of 7.4%.

Nguyen Thi Huong, director-general of the GSO, said these positive outcomes during the first quarter prove the great efforts made by Prime Minister Nguyen Xuan Phuc and relevant units in successfully containing the novel coronavirus (COVID-19) epidemic. This has contributed to effectively implementing the dual goal of combating the pandemic and simultaneously accelerating economic development.

Moreover, the average consumer price index (CPI) in the first quarter of the year increased by 0.29%, a figure which is considered the lowest growth rate over the past 20 years, the GSO representative stated.

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Malie Nguyen