UOB: Vietnamese economy predicted to post 7.1% GDP growth in 2021

Vietnamese GDP growth is anticipated to expand 7.1% this year, to be driven by strong exports and foreign investment attraction, according to the Quarterly Global Outlook 2021 recently released by the United Oversea Bank (UOB).
March 29, 2021 | 08:32
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Vietnamese GDP growth is anticipated to expand by 7.1% this year. Photo: VOV

The report states that Vietnamese exports during the opening two months of the year increased by over 20% compared to last year. Major export items were mobile phones, computer components, and machinery and equipment.

Most notably, foreign direct investment (FDI) inflows have been encouraging, with the country attracting approximately $5.5billion of registered FDI capital during January and February. This marks an annual decline of only 15.6% despite border closures and travel restrictions, in comparison to the unprecedented 25% fall in 2020, VOV reported.

Japan made up the largest source of registered capital during the first two months, pouring in roughly $1.5billion, followed by Singapore with $861.1 million and China with $374.9 million.

According to industry experts, while the upward trend of economic activities remains on track, it is highly dependent on the containment of infections and vaccination globally. For the year ahead, Vietnamese GDP growth is forecast to grow at 7.1%, a rate which is higher than the 6% target set by the National Assembly.

Illustrative photo: VNA

Previously, the World Bank forecasts that Viet Nam’s GDP growth in 2021 is set to rebound to 6.6%, higher than the Vietnamese Government’s target for the nation’s economic growth this year.

According to the international lender's East Asia and Pacific Economic Update April 2021, many of the economies in the region began to bounce back in the second half of 2020 after an initial slump.

However, among major economies of the region, only China and Viet Nam have followed a V-shape recovery path with an output surpassing pre-COVID-19 levels in 2020.

Against this backdrop, only China and Viet Nam are expected to grow strongly in 2021, by 8.1% and 6.6%, respectively, while the rest of the region is expected to grow by only 4.4%.

Regarding the race between infections and vaccination in Viet Nam, the WB supposed that the nation is effectively pursuing COVID-19 elimination, has space to develop a more suitable vaccination strategy for its large populations.

For example, even as the country moves quickly to vaccinate the more vulnerable, it may choose to implement mass vaccination gradually as it obtains better evidence on the efficacy of vaccines and against the variants of concern, the report writes.

The Vietnamese government sets a target of achieving a GDP growth rate of 6.5% or even higher in 2021, Prime Minister Nguyen Xuan Phuc said at a conference between the Government and centrally-run localities on Dec. 29 last year.

Our goal is to catch up and surpass regional and global development levels in a number of areas, including agricultural production, in the coming years,” said Phuc.

“More efforts are needed to soon turn Vietnam into an agricultural powerhouse with a modern and efficient agricultural processing industry,” he told the conference.

To meet the goal, the Prime Minister said it is imperative for Vietnam to boost economic growth in terms of both quantity and quality while speeding up economic restructuring.

Emphasizing the important role of infrastructure development, Prime Minister Nguyen Xuan Phuc affirmed he will launch a number of key inter-regional traffic works after the conference, according to VOV.

He asked ministries and localities to focus on renovating national governance and continue to build a streamlined, effective, and efficient State apparatus, by promoting decentralization and ensuring the unified management role of the locality.

Localities are well prepared to pool resources for production and to capitalize on new investment waves, he stressed.

He warned localities about environmental disasters they would suffer in economic development, saying Vietnam will certainly not trade the environment for economic growth at any cost.

The Government leader also requested ministries and localities to soon overcome shortcomings and pay more attention to policies on social security, especially those on poverty reduction in ethnic minority areas, and at the same time increasing the number of people benefitting from social and health insurance services.

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Malie Nguyen
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