Bright forecast for Vietnam’s economy in 2021

06:00 | 11/02/2021 Economy

(VEN) - Domestic and foreign economic organizations forecast Vietnam’s economy will grow as much as 6.8-7 percent this year, exceeding the six percent target set by the National Assembly and the 6.5 percent target set by the government - if the country takes synchronous measures to make the most of the free trade agreements (FTAs) it has signed. 

bright forecast for vietnams economy in 2021
Vietnam’s GDP growth in 2021 is of great significance for the whole 2021-2025 period

Determined to grow more than six percent

During the final days of 2020, with the ongoing complications of the Covid-19 pandemic and forecasts of four percent negative growth worldwide, Vietnam successfully controlled the spread of the disease and applied business support policies to promote economic recovery, paving the way for GDP growth.

In this context, the National Assembly approved a resolution on the Socioeconomic Development Plan for 2021, which targets a GDP growth of six percent, per-capita GDP of about US$3,700, and annual consumer price index (CPI) growth of four percent.

The General Statistics Office of Vietnam under the Ministry of Planning and Investment has officially announced the 2.91 percent GDP growth of 2020. This was the lowest annual GDP growth compared with the 2011-2019 period but an impressive result in the context of negative growth worldwide due to the impact of Covid-19 and attendant global supply chain disruptions. In Resolution 01/NQ-CP regarding major tasks and solutions to implement the socioeconomic development plan and state budget estimates for 2021, the government set a 6.5 percent GDP growth target, higher than the six percent target set by the National Assembly.

Many economists shared the opinion that the GDP growth targets set by the National Assembly and the government reflect the strong determination of the Communist Party and the government in recovering the economy. The 13th national congress of the Communist Party of Vietnam and the election of deputies to the 15th National Assembly and all-level People’s Councils will take place in 2021. This is also the first year of the socioeconomic development plan for the 2021-2025 period and the socioeconomic development strategy for the 2021-2030 period. Good results in 2021 will pave the way for further success in the coming decade.

Along with the 6.5 percent GDP growth target, the Government also set 96 specific targets for each sector and field, providing the basis for ministries, sectors and localities to devise plans for implementing Resolution 01/NQ-CP, as well as for assessment of implementation results. The government has set out 188 specific tasks which ministries, sectors and localities should fulfill.

bright forecast for vietnams economy in 2021
Vietnam was one of the few countries achieving positive GDP growth in 2020

Opportunities to exceed target

In its recently issued report titled “Taking stock: An update on Vietnam's recent economic developments”, the World Bank forecast possible growth of 6.8 percent in 2021, higher than both targets set by the Vietnamese National Assembly and the government. The forecast was based on the effective control of Covid-19 in Vietnam, proven efficacy of the Covid-19 vaccines, and Vietnam’s experiences and efforts to achieve the dual goals of combating the pandemic and promoting economic growth.

The UK’s Center for Economics and Business Research (CEBR) also forecast a seven percent annual economic growth for the Vietnamese economy in the 2021-2025 period and 6.6 percent for the entire decade. The Hong Kong and Shanghai Banking Corporation (HSBC) in its latest report on Asian economies forecast a 7.6 percent GDP growth for Vietnam in 2021.

Vietnam can be optimistic about opportunities to achieve or even exceed its 2021 GDP growth target. However, the Covid-19 pandemic has not yet been controlled, with new variants of the coronavirus emerging, and the global economy has not fully recovered. Domestic and foreign businesses still face numerous difficulties and challenges. At the same time, the Vietnamese economy with a high level of openness and involvement in bilateral and multilateral FTAs is vulnerable to external factors.

To achieve the 6-6.5 GDP growth target, the government, ministries, sectors and localities have to take synchronous measures. Along with improving the business environment, resolving difficulties for domestic businesses and facilitating the circulation of goods, they must intensify the dissemination of information about FTAs and their opportunities among the business community.

Economist Nguyen Minh Phong:

To achieve the highest levels of socioeconomic development in 2021, Vietnam needs to have decisive policies and suitable mechanisms to create economic impetus and stimulate investment, export and consumption - the three major driving forces of economic growth.

Nguyen Hoa