Vietnam’s economic growth is expected to rebound to 6.7 per cent this year despite the recent resurgence of the COVID-19 pandemic in nearby countries and rise to 7 per cent in 2022, according to a new report from the Asian Development Bank (ADB).
|ADB highlighted bright prospects for the Vietnamese economy |
“Stagnant domestic consumption and weak external demand caused by the COVID-19 pandemic slowed down Vietnam’s economy last year, but the growth momentum remains strong this year and next, made possible by Vietnam’s success in controlling the spread of the virus,” said ADB Country Director for Vietnam Andrew Jeffries. “But significant risks remain this year and next, including the emergence of new coronavirus variants and a delay in the government’s vaccination plan.”
The Asian Development Outlook (ADO) 2021 says Vietnam’s economic growth will be boosted by export-oriented manufacturing, increased investment, and expanding trade. The growth momentum is expected to continue, thanks to ongoing reforms to improve the business environment and Vietnam’s participation in multiple free trade agreements involving almost all advanced economies. Rising international oil prices and increased domestic consumption is expected to push inflation up to 3.8 per cent this year and 4.0 per cent in 2022.
Faster-than-expected recovery in the People’s Republic of China and the United States would significantly expand Vietnam’s trade and growth prospects, the report says. The uneven global COVID-19 vaccine rollout, however, could delay Vietnam’s return to its strong pre-pandemic growth path, given the country’s reliance on external trade. A quick revival of domestic private investment may worsen the risk of asset bubbles, if credit is not channeled to productive sectors.
The report says Vietnam can maintain inclusive growth by softening the pandemic’s impact on poverty and incomes. It urged the government to adopt a long-term sustainable strategy to help the poor and vulnerable diversify their livelihoods through measures such as vocational training and improved access to microfinance for new businesses.
ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members – 49 from the region.