Macroeconomic stabilisation in 2020 can create momentum for 2021

With 2020 now gone after an array of unprecedented uncertainties facing the global and the local economies, the novel coronavirus (COVID-19) pandemic is still spreading in many countries around the world and continues to disrupt socio-economic activities globally.

Furthermore, trade conflicts between various countries and regions are still going on, whilst natural disasters have also hit the nation. Despite these difficulties, the Vietnamese economy maintained growth of 2.91% in 2020 thanks to capable pandemic control and timely support policies aimed at people and businesses.

Despite reaching a GDP growth rate of 2.91%, the lowest growth rate for 10 years amid complicated developments relating to COVID-19 negatively affecting all socio-economic fields, last year can be considered a great success for the country. This can be seen as the nation's economic growth rate in 2020 was among the highest in the world, with GDP in the fourth quarter of last year increasing by 4.48% over the same period from last year.

"This shows the correction direction and the determination and unanimity of the entire political system, the Government, the Prime Minister, in addition to the efforts of the people and business community to effectively carry out the dual goal of ensuring pandemic prevention and control and boosting socio-economic development," says Nguyen Thi Huong, general director of the General Statistics Office (GSO).

With the achievements recorded in 2020 by the nation, many international organisations and financial institutions have given positive forecasts about economic growth prospect ahead in 2021.

The World Bank (WB) predicts that the Vietnamese economy will grow by 6.8% in 2021 and stabilise at 6.5% over the subsequent years. This forecast by the WB is based on the assumption that the COVID-19 crisis will gradually be brought under control, with COVID-19 vaccine proving to be effective.

Moreover, the World Economic Outlook in 2020 held by the International Monetary Fund (IMF) stated that due to the tight control of the pandemic, the nation is one of the few places to maintain a stable growth rate, with an IMF forecast of a 1.6% increase in 2020 and a 6.7% rise ahead in 2021.

According to Dr. Le Duy Binh, macroeconomic stability and growth results in the context of the previous year will serve as a good foundation whilst creating good momentum for economic growth next year. In the short term, the V-shaped graph is likely to continue moving into 2021, especially given the global economic recovery with the COVID-19 vaccine being successfully mass-produced. This will help to support widespread economic recovery, with the graph of the country’s economic growth set to depend on the global economic recovery, which still has many fluctuations.

“With the current efforts to keep the growth rate of 2020, we can fully expect the V-shaped growth scenario in the following years. However, the wide or narrow angle of this V shape depends on many other factors that are difficult to predict at present. However, based on existing evidence and current trends, it is possible to believe that the growth rate in 2021 will be higher than in 2020,” Dr. Binh says.

Dr. Le Xuan Nghia, an economic expert, states that 2021 will be a difficult year, with no major expectations for the national economy. Therefore, a modest economic target should be devised with a growth rate of approximately 5%.

In an effort to achieve higher goals for the economy, he says that it is necessary to change perceptions in terms of digital technology development as a way of spurring economic development.

Dr. Nghia underlines the need to revive Vietnamese digitisation companies, due to digital technology playing an important role in production, business, and sales. Domestic businesses must therefore enhance their linkages with on another, and connect with manufacturers and consumers in a bid to revitalise the national economy, he adds.