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IMF: Vietnam's economy set to grow at 6.5% this year

Malie Nguyen Malie Nguyen

Dieuhuong270198@gmail.com

April 08, 2021 | 17:42

Vietnam’s GDP growth rate is forecast to rise by 6.5% this year, a figure which is higher than the global average of 6%, before climbing to 7.2% in 2022, according to data released in the latest World Economic Outlook report compiled by the International Monetary Fund (IMF).

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This projection was made during the opening session of the 2021 Spring Meetings of the IMF and the World Bank group, VOV reported.

IMF: Vietnam's economy set to grow at 6.5% this year
Women work at Hung Viet garment export factory in Hung Yen province, Vietnam, December 30, 2020. Photo by Reuters/Kham.

The country’s positive growth rate can largely be attributed to drastic measures implemented by the Government in terms of economics and health care.

The IMF recommended that macroeconomic policies be maintained throughout the year in an effort to ensure a sustainable and comprehensive recovery is achieved.

The international financial institution also forecast that the GDP of five countries in the ASEAN bloc, namely Indonesia, Thailand, the Philippines, Malaysia, and Vietnam, will expand by 4.9% in 2021 and 6.1% in 2022.

World economic growth is expected to reach 6% this year, higher than the 5.5% projection made in January.

The news comes as a number of major international financial institutions have made positive assessments on the future outlook of the Vietnamese economy.

IMF: Vietnam's economy set to grow at 6.5% this year

A container ship docks at a port at the Tan Cang – Cai Mep Thi Vai Terminal in Ba Ria–Vung Tau Province, southern Vietnam. Photo by VnExpress/Dang Khoa.

The country’s economic growth rate is forecast to reach 7.1% and 6.6% this year by the United Oversea Bank and HSBC.

An article recently published by news publication borgenmagazine.com of the United States highlights Vietnam’s incredible economic growth since the implementation of a series of economic reforms in 1986 during the Communist Party of Vietnam’s (CPV) sixth national congress.

Despite these positives, the article states that the country’s transportation infrastructure remains woefully behind many other developed economies.

At present, Vietnam is at a crossroads in terms of its development and requires further investment in its transportation network in order to sustain and expand its growth, according to the piece.

The article concludes by outlining how the country has run into trouble financing the North-South Expressway, although the implementation of the Public-Private Partnership Law (PPP) is expected to fix this problem by making PPPs in infrastructure projects simpler and more attractive.

Vietnam’s GDP increases by 4.48% in the first quarter of 2021

The gross domestic product (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%.

IMF: Vietnam's economy set to grow at 6.5% this year
Vietnam’s GDP increases by 4.48% in the first quarter of 2021. Photo: VOV

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.

The CPI growth in March endured a decline of 0.27% over the previous month, although it represented a rise of 1.31% compared to December 2020, according to Huong.

This drop in CPI growth during March can largely be attributed to the decline in shopping demand of consumers following the Lunar New Year festival or Tet, and the abundant supply of food items, VOV reported.

The inflation rate in March also dropped by 0.12% over the previous month, whilst expanding by 0.73% over the same period from last year, thereby making average inflation in the first quarter of the year enjoy an annual rise of 0.67%.

The price index of export goods in the first quarter of the year increased by 0.75% compared to the fourth quarter of last year, whilst decreasing by 0.3% against the same period from 2020.

According to the GSO representative, the domestic gold price is currently fluctuating in line with global gold prices.

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Malie Nguyen