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|Prime Minister Pham Minh Chinh took part in his first international event, photo VNA|
At last week’s 26th international conference on the future of Asia held by Nikkei Inc., Pham Minh Chinh in his first international event as Vietnamese prime minister cited a number of high-profile global institutions saying that Vietnam is among the economies with the best capacity in post-pandemic recovery thanks to its economic and political stability, in addition to the government’s great efforts to improve the domestic business climate.
“The 100-million-people dynamic market of Vietnam boasts all favourable conditions in institution, policy, infrastructure, geography, and political and social stability, as well as a favourable investment climate with good human resources. These are big foundations for Vietnam to strongly develop,” PM Chinh said.
“Over the next 10 years, Vietnam will continue concentrating on implementing strategic breakthroughs namely perfecting institutions, improving human resources quality, and strengthening synchronous infrastructure – especially strategic infrastructure,” he continued. “We will also place special priority on developing digital economy projects, as well as on green economy, the circular economy, and response to climate change.”
Leading in growth
The ASEAN+3 Macroeconomic Research Office (AMRO), a regional macroeconomic surveillance organisation based in Singapore, last week released its fresh report on Vietnam’s economic outlook. AMRO said that Vietnam’s economy has been resilient against the COVID-19 pandemic, and after a sharp decline in GDP growth in Q2 of 2020, the economy rebounded in Q3 and Q4, registering 2.91 per cent growth on-year.
The economic recovery was broad-based and was enabled by the effective containment measures against the pandemic. Manufacturing output was boosted by the robust export sector, which benefited from Vietnam’s relatively resilient export mix as well as positive spillovers from global supply chain restructuring. While domestic consumption recovered following the relaxation of mobility restrictions, the growth rebound benefited also from an acceleration in public investment disbursement.
“The economy is expected to continue to rebound in 2021, to around 7 per cent growth on an annual basis on the back of a strong recovery in external demand, a resilient domestic economy and continued investment inflows,” AMRO said.
According to AMRO, Vietnam is expected to top the region in terms of economic growth for 2021 and 2022 (see graph).
In its May analysis on the economic outlook of ASEAN economies, global analysts FocusEconomics said that the Vietnamese economy is forecast to expand rapidly this year, with growth set to outstrip regional peers on strengthening domestic and foreign demand dynamics. “Our panellists expect GDP to expand to 7.1 per cent in 2021, and 6.8 per cent in 2022. Looking ahead, the economic recovery should gather pace later in 2021, with Q2’s outturn projected to be significantly higher than in the first quarter of the year,” the report said. The Vietnamese economy grew 4.48 per cent in Q1, also the highest in the region. The government is now targeting a 6.5 per cent growth rate this year.
According to the International Monetary Fund (IMF), the Vietnamese economy’s total GDP was estimated to be $340.6 billion in 2020.
In late March, the then Prime Minister Nguyen Xuan Phuc, while talking about the country’s socioeconomic development plan for 2021-2025, stated that Vietnam could rank second in ASEAN in terms of GDP scale.
“Vietnam’s GDP scale is among the world’s top 40 largest economies and fourth in ASEAN, with per capita GPP of over $3,500. Vietnam is also among top the 10 nations worldwide with the highest growth, and among the 16 most successful emerging economies in the world,” he stressed.
In its Vietnam Macro Monitoring report released last week, the World Bank also said Vietnam’s economy is trending up.
“Industrial production index increased by 1.1 per cent on-month and 24.1 per cent on-year in April 2021. The continued expansion also reflects recovering domestic consumption in addition to solid external demand for high-tech manufacturing products,” said the report. “The most dynamic sub-sectors include beverage, clothing, and home appliances, as well as basic metals, electronics, computers and optical products, and machinery. The Purchasing Managers’ Index index rose from 53.6 in March to 54.7 in April, marking the sixth consecutive month of continuous expansion of manufacturing.”
The World Bank has projected that Vietnam’s economy will grow about 6.8 per cent in 2021 and, thereafter, stabilise at around 6.5 per cent.
Once among the smaller economies in ASEAN, Vietnam is now poised for economic modernisation and is participating actively in competitive, export-oriented service industries.
Vietnam has enjoyed years of robust growth and macroeconomic stability, a relatively stable exchange rate, and strengthening external trade relations. Registered foreign direct investment reached a record high in 2019 of $38.2 billion – up 7.2 per cent on-year and among the strongest in the region, while sitting at $28.53 billion in 2020 when COVID-19 was affecting the economy. As of April 20, the sum was $12.25 billion.
PM Chinh told the Future of Asia event last week, themed on shaping the post-pandemic era, that Vietnam would do its best to improve national economic competitiveness in favour of the public, enterprises, and investors.
“We will continue perfecting institutions in a full, synchronous, and modern manner, and boosting international integration as a prerequisite. We will also continue creating a more favourable, healthy, and equal business and investment climate for all sectors of the economy,” the PM said.
“The Vietnamese economy’s strong development is opening up many opportunities for investment and business for enterprises from the region and the wider world,” he reaffirmed. “We stand ready to cooperate with all of you to expand investment cooperation in strategic infrastructure, energy, manufacturing and supporting industries, environmental industries, high-quality agriculture, electronics, ICT, biotechnology, smart cities, and logistics.”
“The government will continue improving the country’s business environment, creating more favourable conditions, and accompanying foreign investors so that all of us can win together and, at the same time, share risks that occur due to objective causes.”
The Vietnamese leader also recommended that nations in Asia should further boost cooperation, integration, and economic connectivity based on equality and bilateral and multilateral effectiveness to ensure smooth flows of global trade, investment, and supply chains.
“The post-pandemic recovery in Asia will remarkably depend on the capacity of trade and investment within the region and outside it,” PM Chinh said. “These efforts need to be implemented on all levels, from global, regional, and inter-regional, to efforts in speeding up reforms in each nation. Open and rule-based cooperation frameworks will help further boost the process of economic recovery and development of the region.”
“Simultaneously, all parties also need to discuss and find methods for operating the region’s economy suitable to the condition of fighting the pandemic while developing further, with a priority on goods movement and people’s travelling, ensuring supply chains, production, and businesses can operate smoothly,” he added.
The Future of Asia is an international gathering where political, economic, and academic leaders from the Asia-Pacific region offer their opinions frankly and freely on regional issues and the role of Asia in the world.