Breakthroughs in institutional reforms could help GDP grow 6.76 percent in 2021-2023

If breakthroughs in institutional reforms are achieved to improve growth quality, coupling with timely and sound fiscal and monetary policies, the Vietnamese economy could expand 6.76 percent a year during 2021-2023, according to Director of the Central Institute for Economic Management (CIEM) Tran Thi Hong Minh.
Breakthroughs in institutional reforms could help GDP grow 6.76 percent in 2021-2023 hinh anh 1A corner of Ho Chi Minh City - the southern hub of Vietnam (Photo: VNA)

Hanoi (VNA) – If breakthroughs in institutional reforms are achieved to improve growth quality, coupling with timely and sound fiscal and monetary policies, the Vietnamese economy could expand 6.76 percent a year during 2021-2023, according to Director of the Central Institute for Economic Management (CIEM) Tran Thi Hong Minh.

Minh presented the forecast while speaking at the workshop “Making Economic Recovery and Institutional Reforms Intertwined After COVID-19 – Way Forward for Vietnam” recently held by CIEM with the support from Aus4Reform and the Australian Embassy to Vietnam.

According to the scholar, thanks to good control of the COVID-19 pandemic, Vietnam has seen good recovery in its socio-economic activities.

Right in the time of the pandemic, the Southeast Asian country witnessed great strides in international integration such as ratification and implementation of the EU – Vietnam Free Trade Agreement (EVFTA), EU – Vietnam Investment Protection Agreement (EVIPA), UK – Vietnam Free Trade Agreement (EVFTA), and the Regional Comprehensive Economic Partnership (RCEP).

Although Vietnam is one of the very few countries successfully containing COVID-19, creating a basis to recover and promote domestic production, as well as reopen the economy safely, Vietnam needs to adopt a long-term plan for post-pandemic economic recovery, Minh added.

CIEM has outlined three scenarios for economic growth, based on Vietnam's management of the pandemic this year. Under the first scenario, CIEM forecasts that the Vietnamese economy will grow at an average 6.35 percent a year in the next three years.

Under the second scenario, with fiscal and monetary policy easing, the average growth could reach 6.7 percent.

Under the third scenario, with fiscal and monetary easing along with institutional reform, the economy could expand 6.76 percent.

Regarding the reform process for Vietnam, Nguyen Anh Duong from CIEM said that it should continue its COVID-19 prevention work and its efforts to remove bottlenecks facing the business community and workers and promote economic institutional reform this year.

In 2022, it is necessary for the country to carry out economic recovery measures in tandem with economic institutional reform. Meanwhile, solutions to support economic recovery should be withdrawn, and focus should be sharpened on economic institutional reform, Duong added.

Vietnam can achieve better economic growth if it loosens monetary and fiscal policies, but it could suffer from higher inflationary pressure, he pointed out.

Loose monetary and fiscal policies could result in higher economic growth and improvements in productivity if combined with institutional reform, he added./.
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