Passing the narrow door
On domestic and international forums, the popular keyword about the year 2020 is Covid-19. This pandemic has caused global threats, and its socio-economic impacts are immeasurable. The International Labor Organization (ILO) described the big picture as the world was still struggling to dispel the shadow of the pandemic crisis, which had infected 71.3 million people, killed more than 1.6 million, reversed the trend of economic growth, caused the unemployment indices to soar, and sent more people into poverty.
“The COVID-19 crisis has exposed deep-rooted inequalities. Without profound structural changes, these will merely intensify, with consequences that would be very difficult to predict,” said ILO Director-General Guy Ryder.
In the latest World Economic Outlook, the IMF said that the world's GDP in 2020 would decrease by 4.4 percent, much lower than that in the pre-pandemic period. It emphasized that even when the current crisis is over, most of the economies will suffer long-term losses in many ways.
In that context, Vietnam could not avoid the mutual impacts. Particularly, production and business activities declined. Economic growth slowed down. The number of enterprises that cease operation increased sharply. The employment and income of workers were affected. However, amid the tense situation, Vietnam still spread bright spots, as the country managed to prevent the pandemic effectively and maintain the general growth momentum. At the opening session of the year-end meeting, Prime Minister Nguyen Xuan Phuc presented a report on the socio-economic situation. He emphasized that in 2020, although the country was heavily affected by the Covid-19 pandemic, economic growth for the whole year was estimated to reach 2-3 percent. Vietnam is one of the fastest-growing countries in the region and the world, possibly ranking fourth in the ASEAN. In general, in the 2016-2019 period, the growth rate of Vietnam was fairly high, at an average of 6.8 percent per year.
This result is contributed by the whole political system and the consensus of citizens and soldiers about the responsibility to prevent and control the pandemic and effectively overcome damages. Besides, the production and business activities were maintained at a reasonable level to support enterprises and ensure social security. It is not self-praise. At the end of the year, several international newspapers and news agencies cited data from global research organizations and institutions that Vietnam had reduced economic losses caused by the Covid-19 pandemic and was a rare country in Southeast Asia that still kept positive growth momentum. The combination of the strategies of tracing and controlling the source of infection has limited Covid-19 cases. Therefore, Vietnam has averted the worst economic impacts caused by the pandemic.
The year 2021 has special significance to Vietnam, with the 13th National Congress of the Party, the implementation of the five-year socio-economic development plan for the period of 2021-2025, and the socio-economic development strategy for the next ten years with a vision to 2045. The general goal is to arouse the desire of developing a prosperous and happy country, promoting comprehensively and synchronously innovation, industrialization, and modernization, and striving to make Vietnam become a developed socialist-oriented country by the middle of the 21st century.
In that context, the National Assembly has identified general goals of preventing the pandemic, recovering and developing the social economy, controlling inflation, and restructuring the economy attached with changing new growth model. The target of the gross domestic product (GDP) approved for this year is to increase by about 6 percent, doubling that in the previous year. Some people said that implementing the dual goals amid the context that the root of the Covid-19 pandemic has not been controlled is difficult. Regarding this matter, Minister of Planning and Investment Nguyen Chi Dung explained that the impact of Covid-19 and global political instability is complicated. However, besides that, there are also many opportunities and potentials for growth, including new-generation free trade agreements (FTAs), such as the FTA with the EU and the Regional Comprehensive Economic Partnership, investment shift, e-commerce, and the establishment of new business models.
The most convincing proof is that in the last eventful year, FDI attraction into Vietnam remained excellent, showing its attractiveness in the eyes of international investors. Especially, Vietnam welcomed many relatively large projects, including the US$4-billion Bac Lieu Liquefied Natural Gas to Power Complex, the $1.3-billion Southern Petrochemical Complex, and the $1.3-billion urban center of Tay Ho Tay. Australia’s Financial Review stated that international trade tensions and the successful response to the pandemic had increased the attractiveness of Vietnam to foreign enterprises that are looking to shift production chains. Mr. Rob Subbaraman, Head of the Global Macro Research at Nomura Institute, predicted that in the coming years, investment flows in Asia would shift more. Noticeably, in countries like Japan and China, the population is aging, the pension fund is growing, and the wage costs are climbing. Therefore, countries in the ASEAN and India will attract more investment. Next year, once the Covid-19 pandemic declines, investment capital will increase.
Releasing internal resources
After 35 years of innovation, Vietnam has made remarkable progress, affirming its potentials and position in the international arena. Entering a new period of development, the views of the Party and the State are still to maximize internal resources, encourage and create favorable conditions for enterprises and people to develop production and business activities; promote start-ups and innovation; improve the capacity of the management apparatus and the efficiency of State-owned enterprises. In fact, the reform and improvement of the quality of the institutions of the market economy are prerequisites to promote development.
The new context opens up new opportunities to realize the desire towards prosperity and might. However, the economy still has many hidden risks; the ability to resist and adapt to external impacts remains weak; the risk of moving backward remains visible. Contributing opinions to the draft documents submitted to the 13th National Congress of the Party, experts said that the State must renew thinking of development, continue to promote institutional reforms and innovation, and arouse the aspirations towards developing the country for a peaceful and happy life of the people. There are still many shortcomings, but Dr. Nguyen Dinh Cung, a senior economist, said that after more than 30 years of innovation, it was time for Vietnam to rise. The GDP growth rate must be set at a higher level in the next ten years to trigger aspirations. In his point of view, the country set goals not only by relying on reality and scientific assessments but also by laying down requirements on the side of management and implementation. It is the time to ask for the art of arousal and stimulation of creativity. There are many things to do for both the State and enterprises. Of which, the most important thing for the State is to create a truly fair and healthy competitive environment.
Vietnam has set a high growth target, but in fact, policymakers have considered carefully the uncertainties of the global economy and the impact of the pandemic. Therefore, when setting the target for this year and the next five to ten years, the determination to strive to achieve the highest results, and at the same time, prepare plans for active adaption to changes, has already been taken into account and given many different scenarios. The optimistic point is that at the end of the year, forecasts of international organizations all said that Vietnam's economy would speed up again in 2021. The Asian Development Bank (ADB) gave the country a growth figure of 6.3 percent; Ms. Era Dabla-Norris, Division Chief of the Asian Division in the IMF’s Asia Pacific Department, affirmed that Vietnam's economy would recover strongly, reaching 6.5 percent when it returned to normal. A recent report by Capital Economics stated that Vietnam would be the fastest-growing economy globally this year.
The Covid-19 pandemic is still raging, but the results achieved last year give Vietnam the confidence for the new year. The macro-economy was stable, and the economy's major balances were ensured. Inflation and the exchange rates were controlled well. The trade balance saw a high surplus with a trade surplus at $17 billion and foreign exchange reserves increasing to $93 billion. The country also ensured social welfare and people's life although it suffered heavy losses caused by storms and floods.