Positive growth trajectory likely

The government is boosting public investment, which will help reach growth goals, photo Le Toan

Deputy Minister of Planning and Investment Tran Quoc Phuong told VIR that the Ministry of Planning and Investment (MPI) is designing feasible scenarios for economic growth next year, with the target of about 6 per cent considered achievable.

“Despite massive difficulties including those caused by COVID-19, this target will be met, even without a vaccine for the virus which would keep many economies in negative growth,” Phuong said.

Under the MPI’s forecasts, if the pandemic is well controlled, tourism and numerous other sectors such as aviation, hotels, and services could revive and flourish strongly after being almost frozen for many months. Still, Phuong remained cautious, saying, “Currently, no-one can confirm the end of the situation if there is no vaccine available.”

But opportunities are still seen as propellants for economic growth next year.

“The most important for GDP growth is the industrial sector, which is recovering, followed by agriculture and services,” Phuong noted.

In 2020, the index of industrial production (IIP) still reported positive growth. Specifically, the IIP has continuously increased over the last few months, at 3.6 per cent on-month and 5.4 per cent on-year in October, while it was 2.3 per cent in September and 3.5 per cent on-month in August.

State-run Electricity of Vietnam reported that its performance has been reviving over the past few months, with its total 10-month revenue from electricity sales reaching over VND330 trillion ($14.34 billion), up 2.84 per cent on-year. In October alone, the rate increased 6.53 per cent on-year.

The group’s gross output of industry in the 10 months is estimated to be VND294.5 trillion ($12.8 billion), up 3.08 per cent on-year.

In any economy like Vietnam’s, the performance of the power sector reflects how the economy is performing as a whole, with electricity being a vital input for production. The figures show that domestic production, especially industrial production, is increasing after months of being seriously affected by the pandemic which has forced enterprises to reduce their production and general business operations.

One of the key driving forces for economic growth of 2021 is, according to Phuong, the recovery of exports, a good measure for the performance of production.

“In previous times, GDP growth was often equal to half of the export growth. But now, the scale of exports and GDP are both big so the growth levels are almost the same,” Phuong explained.

In the first 10 months of this year, export growth was always maintained at a positive rate despite the health crisis. In October the trade surplus was $2.94 billion, which is the highest amount among the first 10 months, while export turnover in the same period was $229.8 billion, up 2.7 per cent on-year, approximately equal to GDP growth of the economy.

The International Monetary Fund (IMF) last week released its latest forecast for Vietnam, stating that the country will grow at a positive level for 2020 as a whole. “Thanks to Vietnam’s swift actions to contain the economic fallout of COVID-19, growth this year is expected to be 2.4 per cent, among the highest in the world,” said the IMF in a statement. “Macroeconomic policies should remain accommodative, especially fiscal policy, until the recovery is firmly underway.”

According to the IMF, the GDP scale of Vietnam this year is estimated at $340.6 billion, exceeding Singapore ($337.5 billion) and Malaysia ($336.3 billion), and ranking fourth in ASEAN.

In order to secure 2021’s economic growth, the MPI also highlighted the role of public investment. The disbursement of public investment of 2020 is fairly strong, with 42.2 per cent in the increase of October, and 34.4 per cent rise of the first 10 months over the same period of last year.

“The sharp rise of public investment disbursement, which has significantly contributed to the GDP growth of the country, will be a key driver for recovery in 2021,” Phuong stressed. “The target of 6 per cent or even more will be absolutely possible if all measures are carried out synchronously and drastically.”