Vietnam’s economy enters 2021 with optimism: CIEM economist

Hanoi (VNA) – The Central Institute for Economic Management (CIEM) introduced two scenarios for Vietnam’s economic growth this year during a seminar on January 15, with the economy forecast to expand 5.98 percent in H1 and 6.46 percent in H2.

The information was revealed during a seminar themed "Vietnam's Economy in 2020 and prospects for 2021: Reform, Integration, and Sustainable Development" co-hosted by the CIEM and the Australia Supports Economic Reform in Vietnam (Aus4Reform) in Hanoi.

“Though the global economy and the COVID-19 pandemic remain uncertain, major achievements and experience last year are leading Vietnam into 2021 with optimism,” said Nguyen Anh Duong, head of the CIEM's General Research Department.

Duong said last year, Vietnam maintained a stable macro-economy and was among Asian countries early recovering from the pandemic. This, coupled with strengthened macro-economic management policies, has heightened enterprises and investors’ confidence in Vietnam, he noted.

Duong went on to say that the two scenarios have been developed by CIEM economists based on the global and domestic economic outlooks by multiple organisations and the possibility of the launch of domestic economic policies.

Production of electronic components at Doosung Tech Vietnam Co., Ltd. in Hoa Binh’s Luong Son Industrial Park. (Photo: VNA)

Accordingly, Vietnam could achieve a growth rate of 5.98 percent in the first scenario and 6.46 percent in the second. The average inflation was projected at 3.51 percent and 3.78 percent, respectively.

Export was expected to grow by 4.23 percent in the first scenario and 5.06 percent in the second. Trade surplus was forecast to stand at 5.49 billion USD and 7.24 billion USD, respectively.

CIEM experts said the domestic economy will be affected by several factors this year such as the fourth Industrial Revolution and the rapid development of digital transformation, as well as stronger consumption demand.

It is likely that the domestic demand will grow at a faster pace this year, so firms should pay more attention to the local market, the CIEM official said.

He also proposed the government to continue enforcing real investment and business reforms which would have considerable influence on whether foreign enterprises expand their presence in the country.

Illustrative photo. (Source: VNA)

The official further warned that despite various benefits brought by the EU-Vietnam Free Trade Agreement (EVFTA), Vietnam may face more trade defence lawsuits and investigations on tax evasion and origin frauds.

In addition to dealing with short-term economic problems, Vietnam must urgently foster larger-scale reforms on its macro-economy and legal systems in order to boost business and production, Duong added. From this perspective, the COVID-19 is a wakeup call for Vietnam, forcing it to introduce reforms that are sufficiently qualitative to promote sustainable development.

In 2020, Vietnam achieved a Gross Domestic Product (GDP) growth of 2.91 percent, an impressive figure despite the impact of the COVID-19 pandemic, according to the General Statistics Office (GSO).

The rate was the lowest during the 2011-20 period due to impacts of the COVID-19 pandemic, but among the world’s highest, which demonstrates the determination of the Government as well as efforts by people and the business community to realise the twin goals of containing the coronavirus and sustaining positive economic growth.

This year, world organisations have also tipped Vietnam's economy to speed up again.

The Asian Development Bank (ADB) forecast that the Vietnamese economy will grow by 6.3 percent this year; the United Overseas Bank (UOB) predicted the economy to grow 7.1 percent, and HSBC even gave a figure of up to 8.1 percent./.