Economic institute forecasts 6.3% GDP for Vietnam in 2021

VOV.VN - The local economy is back on track following the negative impact caused by the COVID-19 pandemic and is projected to grow by between 6% - 6.3% this year, according to the Vietnam Institute for Economic & Policy Research (VEPR).

Unveiling a macroeconomic update for the first quarter of the year in Hanoi on April 20, Dr. Pham The Anh, lead economist of the VEPR, stated that the target is likely to be achievable due to Vietnam’s effective anti-coronavirus measures, and signs of global economic recovery following the easing of restrictions in many countries.

Furthermore, the recent establishment of a new Party and State leadership is anticipated to create a dynamic economic outlook for Vietnam throughout 2021 and ahead to subsequent years, said Dr. Anh.

The VEPR report indicates that Vietnam enjoyed a GDP growth rate of 4.48% during the first quarter largely due to the Government’s swift control of COVID-19 outbreaks which served to maintain economic performance. Meanwhile, economic expectations were also lifted thanks to to the completion of the Free Trade Agreement and the Investment Protection Agreement between Vietnam and the European Union.

Moreover, the high growth was largely driven by a rapid disbursement and accelerated implementation of key public investment projects alongside a wave of investment and trade shifting, helping to stabilise the macro environment and control inflation at an acceptable level.

Despite this positive outlook, Dr. Anh warned that Vietnam is facing a range of challenges caused by an uncertain global economic environment. The recurrence of COVID-19, accompanied by blockade measures occurring in many countries which prolong supply chain failures, will ultimately cause business resilience to be weaker. In addition, various geopolitical conflicts between major economies could expose an open economy like Vietnam to plenty of unexpected risks.

Internally, Dr. Anh urged the country to be cautious about risky factors such as a large fiscal imbalance, a low speed of infrastructure development investment, and low management efficiency.

The overall health of the banking-financial system also remains vulnerable in spite of improvements, whilst there is still a heavy dependence of growth on the foreign direct investment (FDI) sector, coupled with a lack of autonomy in terms of technology and raw materials within the manufacturing sector.

When detailing solutions to these issues, the VEPR report examines social security policies and how they can be quickly implemented and target the right people. It emphasises that policy implementation must pay close attention to workers in the informal sector as they make up a large proportion of those impacted and are the most vulnerable to crisis. They would also be the hardest hit by issues and are the difficult to access through support policies.

The report also recommends that support policies for businesses include those on tax breaks, be implemented quickly to meet the practical needs of businesses.

With regard to integration, the report points out that in the year ahead the country’s major markets, including the United States and China, are expected to enjoy a significant recovery which will present advantages for local exporters.

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