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|PM: Vietnam targets economic growth of at least 6.5% in 2021|
1. GDP growth amidst a severe global economic downturn
|Viet Nam was among very few countries to post positive GDP growth. Photo by Shutterstock/Igor Grochev.|
Amid the severe global economic downturn caused by the COVID-19 pandemic, Viet Nam was among the very few countries to post positive GDP growth, estimated at 2.5-3 percent. This is attributable to the flexible management of the Government and the determination of the entire political system to complete the dual goals of containing the pandemic and maintaining economic growth. The result creates a crucial foundation for the country to fulfill socio-economic targets during 2021-25, according to Vietnam News Agency.
2. Vietnam a founding member of the world’s largest free trade agreement
|Prime Minister Nguyen Xuan Phuc witnessed the signing ceremony of the RCEP agreement on November 15. Photo: VNA|
The RCEP agreement was signed on November 15, within the framework of the 37th ASEAN Summit organized by Viet Nam as ASEAN Chair. The signatories comprise 10 ASEAN member countries and five partners – China, Japan, the Republic of Korea, Australia, and New Zealand. The pact is expected to create the world’s largest free trade agreement area with a combined GDP of US$26.2 trillion or about 30 percent of the global GDP and nearly 28 percent of the global trade. Apart from RCEP, the EU-Viet Nam Free Trade Agreement (EVFTA) came into force on August 1, which has opened up many opportunities for Viet Nam.
3. Huge losses caused by natural disasters
National Highway 1A running through Thua Thien Hue Province is flooded, October 10, 2020.
Photo by VnExpress/Vo Thanh.
The year 2020 witnessed unusual and extreme weather patterns, notably the historic flooding in the central region. Storms ravaged the region one after another in October and November, with the ninth – Molave - the most destructive storm over the past two decades.
Torrential rains triggered massive landslides at the Rao Trang 2 Hydropower Plant in central Thua Thien-Hue Province, Nam Tra My and Phuoc Son districts in central Quang Nam Province, and Huong Hoa District in central Quang Tri Province, which claimed many lives. In addition, riverbank and coastal slides in the Mekong Delta region, and earthquakes in Muong Te and Moc Chau in the northern mountainous provinces of Lai Chau and Son La caused great human and property losses. The total damage caused by natural disasters in the year was estimated at VND38.4 trillion (US$1.66 billion), with up to VND31.7 trillion by floods and storms.
4. Program on national digital transformation approved
Prime Minister Nguyen Xuan Phuc on June 3 approved the national program on digital transformation until 2025, with a vision toward 2030. This is the first time the Government has issued a decision on national digital transformation, with the aim of developing a digital Government, economy, and society and establishing Vietnamese digital technology enterprises that can go global. Under the program, the digital economy is expected to make up 20 percent of the country’s GDP, and Viet Nam is expected to enter the world’s top 50 countries in the Global Competitiveness Index (GCI) by 2025. By 2030, the digital economy will make up 30 percent of the country’s GDP and Viet Nam will be in the world’s top 30 countries in the Global Competitiveness Index.
5. Trade surplus soars despite COVID-19
Although the COVID-19 pandemic has severely disrupted the global supply chain, Viet Nam’s exports stayed high, with the trade surplus hitting $19 billion. In 2020, 31 groups of commodities joined the more than $1 billion club in export revenue, making up 92 percent of the total export value. Of them, six posted export revenue of more than $10 billion.
6. Public investment disbursement grows strongest in a decade
Vietnam spends a significant volume of public funds on major infrastructure projects in 2020. Photo: Nhan Dan
Public investment disbursement has been stepped up in the year and is projected to exceed 90 percent of the set target, the highest in the 2011-20 period. Since the beginning of this year, the Government has regarded public investment as a major resource to spur national economic growth.
After a conference on public investment in July, the government dispatched seven delegations to ministries and provincial authorities to learn about the situation and seek measures to remove the bottlenecks in disbursement. As a result, the rate of public investment disbursement accelerated in the second half of 2020 to reach 91.1% of the full-year target, with the total figure at VND466.6 trillion (US$20.2 billion), up by 34.5% from 2019.
7. Central bank cuts cut policy rates for three times
|An employee counts Vietnamese banknotes at a bank in Hanoi. Photo by VnExpress/Giang Huy.|
This was the first year the State Bank of Viet Nam slashed policy rates three times, by 1.5-2 percent per annum. The adjustment has supported liquidity for credit institutions, lowering borrowing costs for people and businesses.
It cut the refinancing rate from 4.5 percent to 4 percent and the discount rate from 3 percent to 2.5 percent. It also lowered caps on the interest banks pay on dong deposits from 4.25 percent to 4 percent for periods of one to six months.
For longer maturities, banks are allowed to decide their own rates depending on the market. Major banks are keeping the rate at 6 percent for 12-month deposits.
8. Number of dissolving firms surge
|A woman walks past a closed shop on Hanoi's Chua Boc Street. Photo by VnExpress/Ngoc Thanh.|
The COVID-19 pandemic ravaged the business community and a total of 93,500 enterprises ceased operations, waited for dissolution procedures, or completed dissolution procedures during January-November, a year-on-year increase of 15.6 percent. Most of the companies operated in catering, real estate, brokerage service, and logistics. The increase in dissolving businesses makes the Government’s target to have at least 1 million enterprises this year unfeasible.
Most of the dissolved and suspended businesses were small, with a capital of less than VND10 billion ($430,600), and had been in operation for less than five years.
9. Stock market marks 20th birthday
|Minister of Finance Dinh Tien Dung beat the gong to open the first stock trading session in 2020. Photo: VNA|
After 20 years of operation, the Vietnamese stock market has developed in both scale and quality, and become an important channel to mobilize mid and long-term capital, making a significant contribution to the economy. As of November 30, the country’s stock market capitalization had exceeded VND6.11 quadrillion ($264.24 billion) - the highest level ever, accounting for 101.33 percent of the GDP and surpassing the target of 70 percent set in the stock market development strategy by 2020.
10. Aviation, tourism suffer heavy losses
The COVID-19 pandemic has severely dragged down revenues of the Vietnam Airlines Corporation. Photo: VNA
2020 was a tough year for the aviation and tourism sectors due to the COVID-19 pandemic. The outbreak drove national flag carrier Vietnam Airlines to lose more than VND15 trillion ($649.6 million), while Vietjet Air, Bamboo Airways, and Pacific Airlines reported tens of trillions of Vietnamese dong in losses. The coronavirus also wreaked havoc on the tourism sector, with the number of foreign visitors dropping 80 percent and that of domestic travelers slipping nearly 50 percent. Total losses were estimated at VND530 trillion.
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