Vietnam’s strong, steady economic growth boosted by success in containing COVID-19

• ADB raises Vietnamese GDP growth forecast to 2.3% this year
• European businesses optimistic about Vietnam economy
• Private sector should be pillar of Vietnam economy: expert

The Asian Development Outlook (ADO) 2021says Vietnam’s economic growth will be boosted by export-oriented manufacturing, increased investment, and expanding trade. The growth momentum is expected to continue, thanks to ongoing reforms to improve the business environment and Vietnam’s participation in multiple free trade agreements involving almost all advanced economies. Rising international oil prices and increased domestic consumption is expected to push inflation up to 3.8% this year and 4.0% in 2022.

“Stagnant domestic consumption and weak external demand caused by the COVID-19 pandemicslowed down Vietnam’s economy last year, but the growth momentum remains strong this year and next, made possible by Vietnam’s success in controlling the spread of the virus,” said ADB Country Director for Vietnam Andrew Jeffries. 

Faster-than-expected recovery in China and US would significantly expand Vietnam’s trade and growth prospects, the report says. The uneven global COVID-19 vaccine rollout, however, could delay Vietnam’s return to its strong pre-pandemic growth path, given the country’s reliance on external trade. A quick revival of domestic private investment may worsen the risk of asset bubbles, if credit is not channeled to productive sectors. 

But, the report says Vietnam can maintain inclusive growthby softening the pandemic’s impact on poverty and incomes. It urged the government to adopt a long-term sustainable strategy to help the poor and vulnerable diversify their livelihoods through measures such as vocational training and improved access to microfinance for new businesses.