Vietnam Sets 2021 Economic Growth Target Of 6.5pct, A Pre-Covid Normal

24-Sep-2020 Intellasia | Forbes | 6:02 AM Print This Post

Vietnam’s cabinet has targeted economic growth of 6.5 percent next year, signaling a return to the same growth pattern experienced before Covid-19, as the manufacturing-led economy emerges from its current slowdown.

The Southeast Asian country’s government expects to rebound next year from the economic slowdown it finds itself now due to the global slump brought on by the pandemic. Vietnam’s authorities call the recovery a top goal, according to statements made Thursday and cited in domestic media.

Vietnam, population 97 million, has managed to keep its reported Covid-19 cases down to 1,068, allowing work, in-country tourism and basic services to keep moving after shutdown orders in April. The country, billed as a global factory alternate to China, also kept manufacturing goods for export, even though it was facing weak demand due to stay-home orders in major import nations such as the US

The economy had surged ahead since 2012, posting 6 percent growth or higher every year largely on the strength of its manufacturing sector along with the increasing spending power of its population. It stood at about $260 billion at the end of last year.

Officials asked the central bank this month to sustain a monetary policy that controls inflation and promotes economic stability, VnExpress International reports. Other ministries were directed to bring in more foreign capital, increase exports and stimulate domestic consumption, the report says.

A low base effect would contribute a further to 6.5 percent growth next year. Vietnam recorded decade-low GDP growth of 1.8 percent in the first half of this year, and expansion is forecast at just 2 percent to 2.5 percent for 2020 overall.

“Economic recovery will not be a V-shape, more like the Nike swoosh sign,” cautions Jack Nguyen, partner in the business advisory firm Mazars in HCM City, in a comment for this post. He anticipates 2021 growth closer to 3%.

Next year’s GDP depends on whether Covid-19 vaccines are available then and whether borders reopen for international travel, Nguyen says. Vietnam, like much of Asia, has closed off to foreign tourists as a safeguard against infection. Inbound tourism normally makes up 6 percent of the economy.

Imports and exports to the EU, following a free trade deal that took effect in July, should also make a difference next year, he says.

The Ministry of Planning and Investment had hoisted a red flag already this month as it expects the global post-pandemic recovery to take as long as four years, according to a research note from the brokerage SSI in Hanoi. The ministry lowered its 2020 forecast at that time and backed off a previous 2021 forecast of 7%.


Category: Regional

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