Positive prospects for Vietnam’s economy in 2021

Besides the target to achieve a 6-percent growth in the gross domestic product (GDP) or to control inflation at or below 4 percent, the mission of the year 2021 is to begin a new period and a new term. Therefore, the impressive results in 2020 are expected to create resilience for this year, thereby creating a foundation for Vietnam to continue to successfully fulfill the socio-economic targets for the period from 2021 to 2025.

Production of high-tech plastic products at Saigon Industry Corporation. (Photo: SGGP)

Production of high-tech plastic products at Saigon Industry Corporation. (Photo: SGGP)

Resilient in the Covid-19 pandemic

Dr. Jacques Morisset, the World Bank Lead Economist and Program Leader for Vietnam, gave an overview assessment on the socio-economic situation of Vietnam in 2020 as ‘Vietnam was resilient in a collapsing world’. In 2020, GDP was estimated to increase by 2.91 percent compared to the previous year. Although it is the lowest growth rate in the period from 2011 to 2020 in the context that complicated developments of the Covid-19 pandemic have negatively affected all socio-economic sectors globally, it is impressive to achieve positive growth in GDP. Vietnam marked a milestone and was highly praised by international friends.

Not only posting growth in quantity but the quality of economic growth is also optimistic. Labor productivity of the whole economy at current prices in 2020 was estimated at VND117.9 million per worker (US$5,081 per worker, an increase of $290 compared to 2019). Thus, according to comparative price, labor productivity increased by 5.4 percent, thanks to increasing labor qualifications. The average consumer price index (CPI) in 2020 rose by 3.23 percent compared to the average in 2019, reaching the target of below 4 percent set by the National Assembly. With the determination and efforts of the Government and the business community, the whole country still had 134,900 newly-registered enterprises. Although the number of newly-registered enterprises went down 2.3 percent compared to the previous year, the average registered capital per enterprise jumped by 32.3 percent, reaching VND16.6 billion.

Thanks to excellent pandemic control, industrial production in 2020 still gained an added value of 3.36 percent compared to 2019. The manufacturing and processing industry advanced by 5.82 percent and played a dispensable role in the overall growth of the industrial sector and the whole economy.

Another convincing example of the correctness of open policy management is the signing and implementation of new-generation free trade agreements (FTAs). Statistics show that the EU and Vietnam Free Trade Agreement (EVFTA), which took effect from August 1, 2020, has created a driving force for GDP in the last quarter to grow more robustly, compared to the third quarter. The agriculture, forestry, and fishery sector surged by 4.69 percent over the same period last year; the industry and construction climbed 5.6 percent; the service sector edged up 4.29 percent.

Dr. Tran Dinh Thien, former Director of the Vietnam Institute of Economics, emphasized that the roots of the remarkable achievements lie in the foundation of macroeconomic stability and growth in the three years from 2017 to 2019, not just the drastic measures carried out in 2020.

Optimistic with economic growth targets

Mr. Vu Hong Thanh, the Chairman of the Economic Committee of the National Assembly, noted that Vietnam's economic development targets approved by the 14th National Assembly at the 10th meeting require great effort. GDP growth is about 6 percent; CPI at about 4 percent; the contribution of total factor productivity to the growth is about 45-47 percent. This is the year of many important events, including the 13th National Congress of the Communist Party of Vietnam and the election of deputies to the National Assembly and the People's Councils at all levels for the term from 2021 to 2025 in the context that the Covid-19 pandemic remains complicated globally, and the strategic competition among great powers has not shown signs of cooling down. However, the above big events are also the winds of change that create new inspiration for a government with many new factors, promoting the spirit of assertiveness and creativity in management and governance.

It is no coincidence that all international organizations are quite optimistic when evaluating Vietnam's economic situation. Based on the assumption that the crisis caused by the Covid-19 pandemic is under control, the World Bank forecasts Vietnam's GDP growth to reach 6.8 percent in 2021 and stabilize around 6.5 percent in the following years. The International Monetary Fund (IMF) forecasts GDP growth at 6.5 percent, and the Asian Development Bank (ADB) at 6.1 percent - still higher than the target set by the National Assembly.
On the side of enterprises – the crucial subject that creates growth – the survey results on business trends conducted by the General Statistics Office of Vietnam on enterprises in the manufacturing industry show that enterprises are optimistic about production and business situation in the first quarter of this year with 81 percent rating ‘stable and better’ compared to the last quarter of last year.

Before the end of 2020, the Government held an online conference to implement plans for each ministry, industry, and locality, thoroughly grasping more than ten groups of solutions and prime tasks in 2021. Along with that, overall targets and nearly 90 specific targets for sectors and fields with the name of each agency in charge of monitoring and evaluation and the timeline for completion also being clearly determined. Besides the fundamental factors, such as aspirations, discipline, solidarity, and drastic action, the action motto of the Government in the coming year will also adopt ‘innovation’. Thus, Vietnam’s economy will be full of optimism in 2021.

By Anh Thu – Translated by Gia Bao

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