Vietnam’s economy keeps growing thanks to important drivers

Wednesday, 2020-11-25 10:56:25
 Font Size:     |        Print
 

Vietnam's economy is expected to grow by 2-3% in 2020.
 Font Size:     |  

NDO - With projected growth of 2-3% in 2020, Vietnam will be one of the fastest-growing economies in the region and the world by tapping into its internal strengths, taking advantage of opportunities and thanks to the economy’s adaptability to new situations.

The most notable aspect is that the main drivers of growth have picked up, helping the economy to recover quickly in the final months of the year.

The first engine is export. The Covid-19 pandemic has caused global trade to fall steeply while Vietnam’s export growth has remained in positive territory, with a rate of over 10% since the third quarter, making Vietnam the country with the fastest growth rate in trade.

As of October, the trade surplus rose to a record high of US$18.72 billion, helping Vietnam increase its foreign reserves. Exports by domestic companies have continued rising to offset the sharp decline registered by foreign-invested firms.

Such impressive results are thanks to the fact that Vietnam has been able to capitalise on signed free trade agreements along with enterprises’ resilience and rapid adaptation amid a highly unstable supply of input materials.

Manufacturing, one of the main economic drivers, has sustained growth while public investment has seen an uptick in disbursement from the third quarter thanks to the Prime Minister’s aggressive instructions and efforts of ministries and provincial authorities. By the end of October, the disbursement rate had reached 68% of the target for 2020. It is expected that disbursement will accelerate in the final two months as many projects are approaching completion.

Recently, the International Monetary Fund upgraded its growth forecast for Vietnam in 2020 to 2.4% thanks to its bold measures to contain the coronavirus, while the World Bank stated that Vietnam’s economy has remained resilient amid the Covid-19 crisis by seizing new opportunities in trade and the digital economy to maintain exports as well as reforming administrative procedures to facilitate businesses and people. The World Bank highly praised Vietnam’s adaptation in stepping up the building of electronic government.

Although Vietnam’s outlook remains positive in the short term, financial institutions recommend that Vietnam should closely monitor fiscal, financial and social risks due to domestic and global uncertainties.

In order to accelerate post-Covid economic recovery, the most important thing to Vietnam is the implementation of various measures in a bold and synchronous manner so as to sustain production and business activities. A survey by the General Statistics Office shows that key enterprises in the manufacturing sector are upbeat about the outlook in the fourth quarter.

Therefore, year-end support measures should focus on strengthening the health of enterprises by implementing existing packages effectively and quickly roll out new support packages in 2021.

In addition to maintaining the growth momentum with traditional drivers, it is necessary to develop new drivers, especially the digital economy, in order to take advantage of unprecedented changes in global economic and trade activity.