Many international organizations predict that the Vietnamese economy will enter a period of post-pandemic growth, with growth soaring to 6-7% and exceeding the target set by the National Assembly.
Successfully achieving the dual goals helped the Vietnamese economy become a rare bright spot on the gloomy map of the global economy in 2020.
In 2020, the GDP growth rate With an estimated growth rate of 2,91%, Vietnam has become one of the few ASEAN countries to achieve positive growth and is among the fastest-growing economies in the world. With a solid recovery foundation and strict COVID-19 prevention measures, Vietnam's growth prospects for 2021 are projected to be quite high by many international organizations.
Typically, financial institution Fitch Solutions has raised its growth forecast for Vietnam to 8,6%, higher than the 8,2% in its previous report. Accordingly, the Vietnamese economy will "bounce back strongly" after the pandemic as the global economy enters a recovery phase, assuming vaccines are being prepared for worldwide deployment. Fitch Solutions had to adjust its economic growth forecast for Vietnam in 2021 when our actual growth rate exceeded their expectations.
Sharing the same view, UOB Bank predicts that the Vietnamese economy will be quite "optimistic" after the pandemic.Vietnam Economic Growth Report(released in early January 2021). In fact, economic growth in the fourth quarter of 2020 reached 4,48% year-on-year, exceeding their previous forecast of 4%; the GDP growth rate of 2,91% for the whole year 2020 was also higher than the predicted figure of 2,7%, and our country became one of the very few economies globally to achieve positive growth during the year when the Covid-19 pandemic spread worldwide.
Similarly, the report Vietnam's macroeconomic update According to data released by the World Bank in December 2020, Vietnam's economic growth in 2021 remains high at 6,8%. Meanwhile, the Asian Development Bank (ADB) estimates Vietnam's growth will reach approximately 6,1%.
Concluding the online consultations with Vietnam from October 15 to November 13, Ms. Era Dabla Norris, Head of the IMF's Article IV Asia-Pacific Mission, stated that Vietnam's economy will recover in 2021 with GDP reaching 6,5% and inflation at 4%.
Although these organizations offer different growth forecasts, they share a common understanding of the factors contributing to Vietnam's growth in the coming year. These include the shift in global trade and investment flows, the recovery of the manufacturing industry, and fiscal and monetary policies implemented to respond to the crisis.
According to UOB, although foreign direct investment (FDI) into Vietnam decreased by 25% to US$28,5 billion due to travel restrictions and affected investor sentiment, foreign businesses continued to inject an additional US$6,4 billion into existing FDI projects, representing a 10,6% increase year-on-year. This promises positive growth prospects in the coming period.
Fitch Solutions believes that one of the key factors supporting Vietnam's growth comes from the opportunities presented by trade agreements. Specifically, thanks to the positive impact of free trade agreements such as EVFTA, UKVFTA, and RCEP, industrial production and construction, which accounted for 33,7% of GDP in 2020, will continue to drive growth in 2021.
In addition, the recovery of the global economy and the trend of diversifying supply chains away from China will help increase demand and boost exports for Vietnamese goods.
Sharing this view, the World Bank believes that processing and manufacturing activities will further flourish as the US and EU economies recover, becoming a driving force for increased demand for Vietnamese exports. The recovery process will be further strengthened by newly adopted regional agreements and the expected synergy between multinational corporations and domestic businesses.
In particular, with its national brand value increasing by 29%, the strongest increase in the world in 2020, defying the global downward trend caused by the Covid-19 pandemic, Vietnam has emerged as a new manufacturing "haven" in Southeast Asia.
Although Vietnam's growth prospects are quite positive, these forecasts are closely tied to the assumption that they "depend heavily on controlling the pandemic globally and introducing vaccines as countries face more severe outbreaks and the emergence of new, more contagious virus strains."
Dr. Jacques Morisset, the World Bank's chief economist, believes that while Vietnam's economy is likely to recover, it is not immune to impacts. “With the rapid spread of the new virus strain and its severity in some countries, Covid-19 will be a global priority. Vaccines are the most powerful and effective ‘medicine’ to help address the bottlenecks in the economy. In an open economy like Vietnam's, when the world improves, the Vietnamese economy will certainly improve as well. However, there are also many challenges awaiting Vietnam in the future.”
Vietnam still faces the challenges of an economy with an input-driven growth model, lacking in-depth growth. This is especially true as Vietnam focuses on policies to respond to Covid-19, limiting resources available to address other issues. Furthermore, the challenges Vietnam faces in the coming period require stronger and more decisive policy mechanisms and solutions to boost the economy. We shouldn't be complacent with small achievements, but rather focus on stimulating the simultaneous development of all three growth drivers: investment, exports, and consumption.
UOB added that although Vietnam has agreed to purchase 30 million doses of AstraZeneca's Covid-19 vaccine, as shared by Deputy Minister of Health Truong Quoc Cuong on January 4th, to strengthen the country's capacity to control the epidemic domestically, Vietnam needs a certain amount of time to implement this plan due to limitations related to supply, transportation difficulties, and the country's healthcare infrastructure.
