Room remains for Vietnam economy to end 2021 at high note

While the current Covid-19 outbreak has brought both ups and downs in the economy during the first seven months of this year, experts suggested there remains room for the economy to end 2021 on a high note.

Customers at Hapro supermarket. Photo: Thanh Hai

The fourth outbreak, which flared up in late April, has impacted Vietnam’s major industrial hubs in the southern provinces/cities, including the Ho Chi Minh City and Binh Duong. The Index of Industrial Production has subsequently been on the decline with an expansion rate from over 26% in April to just over 8% in June.

Director of the General Statistics Office Nguyen Thi Huong expressed concern over a number of major challenges for the economy in the coming time, including rising input materials and transportation fees on the global market; shortage of labor force due to restriction measures; potential disruption to movements of goods; and slow recovery process of businesses after the pandemic.

While the pandemic continues to put pressure on the economy, trade stays as a bright spot to aid economic growth at present. For the seven-month period, trade turnover rose sharply by 30.2% year-on-year to US$373.36 billion, mainly thanks to the recovery of Vietnam’s major export markets, including the US, China, or EU. Of the total, agricultural trade revenue obtained encouraging results with $53.3 billion, or a surge of 33.25% year-on-year.

Along with higher budget collection against last year, Huong expects these are the main contributors for Vietnam’s economy to continue its recovery process in the coming months.

Based on the current situation, the Government set two growth scenarios, with a baseline case of 6% for the whole year, for which the growth rate in the third and fourth quarters would be 6.2% and 6.5% respectively.

In a more positive scenario, Vietnam could reach a GDP growth rate of 6.5% but would require growth of 7% and 7.5% in the last two quarters.

In need of measures for both short- and long-term

To push for high growth, the Government has issued resolution No.63/NQ-CP on measures to aid economic recovery, with the first priority being to contain the Covid-19 pandemic.

Among other measures, Vietnam is expected to accelerate the vaccination program and mobilize the required resources to acquire vaccines supplies.

The resolution called for greater discipline in finance-budget management, speeding up public investment, and promoting digital infrastructure development.

Professor Tran Tho Dat, president of the National Economics University, said the GDP growth target of 6% is within sight in case Vietnam can soon put the pandemic under control.

“Vaccination program continues to be the sustainable solution for Vietnam to move forward,” Dat said.

“We should adopt a more flexible twin goal in both containing the pandemic and boosting growth, depending on the actual situation in each province/city,” Dat added.

Vice Director of the Institute of Economics-Finance Nguyen Duc Do noted public investment, exports, and domestic consumption would be the three key factors for Vietnam’s economy this year.

“The Government has been making drastic solutions to boost disbursement of public investment,” he noted.

Meanwhile, Do expect the digital economy, including e-commerce, would open up new room for Vietnam’s economy to grow and adds more resilience against future external shocks.

Another key priority for the Government would be to ensure timely and fast implementation of current support programs for businesses and individuals.

Chairman of the Vietnam Chamber of Commerce and Industry (VCCI) Vu Tien Loc noted such supports would provide the lifeline for many companies that are struggling for survival.

“This, however, is also an opportunity for Vietnam to continue its administrative reform,” Loc stated.

One month into the launch of the social support package worth VND26 trillion ($1.1 billion),   hundreds of thousands of laid-off workers received financial support worth VND1 trillion ($43.7 million) and over 11.2 million have been entitled to lower premium payment for a combined of VND4.3 trillion ($188 million).