Despite the recent resurgence of COVID-19 cases, Vietnam’s growth outlook remains optimistic and the economy is expected to return to pre-pandemic levels by the second half of 2021, with GDP forecast to grow at 7.6 per cent in 2021, one of the highest in the region.
|Vietnam has been a rare success in handling COVID-19, a success which translates into elevated growth prospects |
The information was revealed in the latest Economic Outlook report from Oxford Economics (OE), commissioned by chartered accountancy body ICAEW.
Accordingly, Vietnam was one of the economies in the world to grow in 2020 due to its success in containing the pandemic. This early success enabled the economy to benefit from the surge in global trade activity and enjoy strong foreign direct investment (FDI) flows that boosted export-oriented and manufacturing industries. Despite a resurgence of COVID-19 cases in Vietnam, which has affected its manufacturing sector and export industries, Vietnam's economy is predicted to rebound swiftly once restrictions are lifted.
The report also revealed that Singapore and Vietnam are expected to continue leading the region in recovery. Specifically, Southeast Asia’s GDP will rebound strongly to 4.8 per cent in 2021, after contracting 4.1 per cent in 2020. This rebound will be due to an improvement in global trade activities, accommodative macro-policies, continued government fiscal support, and low interest rates across the region. Growth is also forecast to improve to 6.5 per cent in 2022 as countries move closer to herd immunity and the recovery becomes more synchronised across sectors.
Southeast Asian economies will continue to experience varying speeds of recovery in 2021, driven by countries’ abilities to contain fresh waves of COVID-19 infections and their success in vaccine procurement and distribution. Uncertainties remain as rates of recovery will depend on the progress of vaccine rollouts and whether the possibility of further lockdowns remains high in the near term. However, the economic outlook report is optimistic about the regional growth prospects of Southeast Asia in the medium to long term.
“While most Southeast Asian economies have experienced a surge in COVID-19 cases since the start of 2021, leading to the reinstatement of social distancing measures, this has dimmed but not derailed regional economic recovery,” said Mark Billington, managing director international at ICAEW. “Moving forward, progress on vaccination will continue to be an important barometer for growth in the second half of 2021. We expect that countries which are able to contain new COVID-19 cases and reach high levels of vaccinations will outperform the rest of the region and be better placed for recovery.”