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Pushing economic growth in the time of pandemic

The pandemic of COVID-19 has been going on in a complicated manner, posing a high risks of community transmission. However, Vietnam’s economy in 2021 has had many optimistic forecasts about growth and developments.

Pushing economic growth in the time of pandemic

Optimistic forecasts

On April 28, 2021, the Asian Development Bank (ADB) realeased the Asian Development Outlook (ADO). Despite the lingering pandemic, Vietnam’s economy in 2021 is forcast to grow by 6.7% and will be 7% in 2020 - a strong and steady growth rate thanks to Vietnam’s success in controlling the pandemic of COVID-19.

Also according to ADO, the main driving force of Vietnm this year is the industry, especially manufacturing industry associated with export. The industry is forecast to have a growth of 9.5% in 2021, contributing 3.5 percentage points to the GDP growth. The sector had a strong start right in the first quarter of 2021: an increase of 6.3% in the first three months of 2020.

Vietnam’s economy in 2021 is forcast to grow by 6.7% and will be 7% in 2020

Nguyen Minh Cuong - ADB Vietnam’s chief economist- said Vietnam’s success in controlling the pandemic and the Investment Law enacted in January 2021 that reduced regulatory barriers on business are expected to promote foreign investment attraction. Foreign direct investment registered in the first quarter of 2021 had an increase of 17.8% year-over-year. The growth of total investment capital will be pushed up thanks to remarkable increase in private investments.

On the other hand, recover of major trading partners will also increase the production demand for export goods, thereby significantly iproving Vietnam’s prospects of trade and growth. The trade is forcast to maintain its strength in 2021 thanks to recovery of Vietnam’s large trade partners and Vietnam’s participation in 15 FTAs with most developed economies worldwide. With the trade surplus of USD 2bn in the first quarter of 2021, Vietnam’s goods export is forcast to increase by 8% this year and next year as well.

However, according to ADB’s experts, there are also potentially significant risks due to unpredictable happenings of the pandemic of COVID-19. The new infections shows there will be much time needed to overcome the epidemic and for vaccination that is in its initial stage. Besides, impacts on income and poverty are severe; lengthening epidemic situation will change short-term economic impacts to medium and long-term systematic problems.

Fighting against the pandemic effectively for better socio-economic developments

The pandemic of COVID-19 which broke out again in a number of localities nationwide in April 2021 with unpredicted complicated happenings has posed many challenges and risks to our country in implementing the double targets “fighting against the pandemic and having socio-economic developments.

According to report from the General Statistic Office, the country’s GDP in the second quarter estimatedly increased 6.61% year-over-yearhigher than the growth rate of 0.39%, of the second quarter in 2020 but lower than the growth rate of 6.73% of the second quarter in the years of 2018 and 2019. In which, the sectors of agriculture, forestry and aqua-product had an increase of 4.11%; the sectors of industry and construction had an increase of 10.28%; the sector of services had an increase of 4.30%. Regarding the GDP use in the second quarter of 2021, the final consumption increased 3.18% year-overyear; accumulated assets increase 6.05%; goods exported and services increased 29.81%; goods imported and services increased 28.53%. The country’s GDP of the first six months of 2021 totally increased 5.64%- higher than the growth rate of 1.82% of the first six months of 2020 but lower than the growth rates of 7.05% and 6.77% year-over-year of 2018 and 2019.

The country’s GDP of the first six months of 2021 totally increased 5.64%

At the Government’s online conference with localities to assess the socio-economic situation in the first six months and on directions, tasks, and solutions for the last six months of 2021 on the afternoon of July 2, PM Pham Minh Chinh clearly stated the situation of the first six months of 2021 showed we have been implementing the double targets well: fighting against the pandemic effectively and having socio-economic developments. In term of social security, no one in any place is in shortage of food or clothing, including remote areas, border areas and island areas. These positive results and achievement have contributed to strengthening and consolidating the people’s trust in the Party and the Government.

However, also according to PM, GDP growth has not yet reached the assigned targets. The macroeconomy is stable but not yet firm. Although there were efforts in disbursement of public investment capital, it was still slow, especially in term of ODA capital. The epidemic has had complicated happenings in HCMC, provinces in the Southeastern and the Central. Business production and lives of a number of people are in difficulties and securities are having potential risks.

PM emphasized the tasks in the coming time: localities need to focus on effective implementation. There should be flexible, reasonable and effective directions and implementation based on practical situations to fight against the pandemic and promote socio-economic developments. There will be places where priority should be given to fighting against the pandemic; there will be places where priority should be given to promoting socioeconomic developments; there will be places priority should be given to the both targets.

In addition, secretaries, chairmen of localities’ People’s Committee should focus on reviewing difficulties and problems relating to institutions, mechanisms and polices. Those belongings to the Government’s authority should be handled on time and effectively with right processes. Those belonging to ministries should be directly handled by ministries. Those beyond the authorities should be reported to those with competent authorities for consideration and handling on the scientific, legal and practical basis. “We have agreements that we have not changed the targets that identified by the 13th Party Congress, the Party Congress of all levels, the Assembly and the People’s Councils at all levels. On that basis and based on 2 overall scenarios developed by the Ministry of Planning and Investment (GDP growth of 6% according to the scenario 1 and 6.5% according to the scenario 2), localities should prepare scenarios of suitable active implementations. The double targets should be implemented with determination although it is a very difficult choice: fighting effectively against the pandemic to have better socio-economic developments and to have better socio-economic developments to fight against the pandemic successfully”, affirmed PM Pham Minh Chinh.

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