Minister: Vietnam Would Lower GDP Growth to 3.5 - 4%

A man works on a construction site in Hanoi on June 21, 2021. Photo: VnExpress

The Ministry of Planning and Investment is considering revising Vietnam’s economic growth rate target to between 3.5% and 4%, from 6.5% originally expected, due to the negative impact caused by Covid-19, Minister Ngyen Chi Dung said.

This revised target will only be achieved if the prolonged pandemic is successfully brought under control by September and the country enters a new normal status, starting from the fourth quarter of this year, VOV cited Dung at a conference September 14 as saying.

2021 would be the second consecutive year that Vietnam has failed to meet its growth target after recording growth of 2.91% last year.

“Though the revised rate is a bit low, the growth is quite impressive given global uncertainties,” said Dung.

According to the minister, the implementation of social distancing measures has dealt a heavy blow to business production and employment nationwide. In addition, the mobilisation of all resources for the Covid-19 fight has greatly affected budget revenue and expenditure, while the prolonged outbreak has also impacted the formation of new businesses and the attraction of foreign direct investment.

Workers in a Ho Chi Minh City garment factory. Photo: VnExpress

Dung said that next year would present both opportunities and challenges due to the pandemic set to last for a long time and many countries now accepting that they must live with the virus.

“Extending social extending to a larger extent is not the way as it will lead to heavy consequences both economically and socially,” he stressed, noting the fact that when the vaccination rate is high, many countries have begun to reopen their economies in parallel with implementing Covid-19 prevention measures.

In his opinion, the world economy is anticipated to gradually recover over the course of next year. However, its recovery will be slower than previously forecast and will be different in countries depending on their vaccination coverage. Global trade order and investment structure would inevitably change, including production and supply chains that would eventually affect Vietnam.

“It is necessary to identify opportunities to take advantage of the recovery process and at the same time to limit risks,” he said.

Based on calculations, Dung anticipates that Vietnamese economic growth will increase by between 6% and 6.5% in 2022.

The minister also added that the Government recently adopted a resolution to remove difficulties for businesses and people affected by the Covid-19 pandemic. He therefore suggested that localities must accompany businesses, listen to their opinions, and meet their requests in their capacity.

World Bank cuts Vietnam GDP growth projection to 4.8%

Businesses are stepping up efforts to maintain production and weather difficulties caused by the Covid-19 pandemic. Photo: VietnamPlus

The World Bank has also lowered its growth forecast for Vietnam this year by two percentage points to 4.8 % as Covid-19 weighs on the economy.

"Whether Vietnam’s economy will rebound in the second half of 2021 will depend on the control of the current Covid-19 outbreak, the effective vaccine rollout, and the efficiency of the fiscal measures to support affected business and households, and to stimulate the recovery," Rahul Kitchlu, the bank’s acting country director for Vietnam, was cited by VnExpress as saying.

The bank assured that while downside risks have heightened, economic fundamentals remain solid in Vietnam, and the economy could converge toward the pre-pandemic GDP growth rate of 6.5-7% from 2022 onward.

Credit rating company Fitch Ratings said recently the renewed outbreaks would act as a setback to Vietnam’s recovery and pegged its growth for this year at 6%.

5.64 percent growth in H1

Vietnam’s GDP growth rate of 5.64% in the first half of this year stays high against other countries in the region and the world. Photo: Vietnamnet

Vietnam’s GDP growth rate of 5.64% in the first half of this year stays high against other countries in the region and the world, according to General Director of the General Statistics Office (GSO) Nguyen Thi Huong.

The rate was higher than the figure of 1.82% recorded in the same period last year, but lower than the 7.05% and 6.77% in the corresponding periods of 2018 and 2019, respectively.

The agro-forestry-fishery sector increased 3.82%; industry and construction 8.36%; and services 3.96%, the office said.

In the second quarter, the country’s GDP was up about 6.61%, as compared with the 0.39% recorded in the corresponding time last year, with the highest rise seen in the industry and construction sectors (10.28%).

The manufacturing and processing industry remained the driver of the national economy, with a growth rate of 11.42%.

Registering an increase of 5.63%, wholesale and retail took the lion’s share in the service sector. Financial, banking and insurance services saw a rise of 9.27%, while lodging and catering services decreased 5.02%.

In terms of economic structure in the first two quarters, agro-forestry-fishery made up 12.15%, industry and construction 37.61%; and services 41.13%.

The GDP growth reflected the drastic management by the Government and the Prime Minister, as well as the consensus of the entire political system, the business community, people nationwide and those working on the frontline of the Covid-19 combat.

Huong said the fourth wave of the Covid-19 outbreaks that began late April has posed major challenges to economic management and administration, as well as in ensuring social welfare.

She forecasted more difficulties and challenges to national socio-economic development in the time ahead as Vietnam’s open economy will suffer multi-faceted impact from the complex and unpredictable developments of the world economy, VietnamPlus reported./.

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