Economic institute anticipates 6.3% GDP for Vietnamese economy in 2021

Several factors including effective pandemic control will help Vietnam grow 6-6.3 percent this year, according to the Vietnam Institute for Economic and Policy Research (VEPR).
April 22, 2021 | 00:40
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The institute says that this year’s growth will be driven by the government successfully containing the pandemic in its early stages, the impacts of the EU-Vietnam Free Trade Agreement (EVFTA) and EU-Vietnam Investment Protection Agreement (EU-Vietnam IPA) that took effect last August.

It will be the result of faster disbursement of public funds, more companies shifting operations to Vietnam from China because of the U.S.-China trade spat, and macroeconomic stability.

These factors will create favorable conditions for the government to implement policies supporting economic growth, the institute says.

Economic institute anticipates 6.3% GDP for Vietnamese economy in 2021

A container ship docks at the Cat Lai Port in HCMC. Photo by Shutterstock/xuanhuongho.

However, it also notes that the resurgence of Covid-19 in some countries will continue to disrupt the supply chain in 2021, thus making enterprises become more vulnerable. The geopolitical conflicts among some countries in the world may affect Vietnam’s open economy.

The Institute identifies some weaknesses including infrastructure development not keeping up with a rapidly growing economy, a vulnerable banking system, and the dependence of the economy on foreign-invested enterprises.

Low-quality human resources, slow equitization of state-owned enterprises are other hurdles to economic growth.

The institute recommends that reducing or deferring tax payments and other forms of assistance to Covid-19-impacted enterprises should continue.

Vietnam should also pay attention to the stock market and real estate market bubble.

"Ensuring macroeconomic stability is crucial for the post-pandemic economic rebound. Vietnam should also diversify its import and export markets to prevent being heavily dependent on a few economic partners," the institute recommends.

The country’s GDP growth was just 2.9 percent last year, though it was one of the few economies in the world to achieve positive growth instead of contracting, as happened with most other countries amid the pandemic.

Economic institute anticipates 6.3% GDP for Vietnamese economy in 2021

Illustrative photo: VOV

The Vietnamese government has set an official growth target of 6.5 percent this year.

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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