The nation’s economy is expected to record growth of 1.8% this year, despite the impact of the novel coronavirus (COVID-19) pandemic, before bouncing back to 6.3% in 2021, according to a new report released on September 15 by the Asian Development Bank (ADB).
“Lower domestic consumption and weak global demand caused by COVID-19 have hurt Vietnam’s economy more than expected. But economic growth will be resilient in 2020, in large part due to the Government’s success in controlling the spread of COVID-19,” said Andrew Jeffries, country director for Vietnam of the ADB.
“Economic growth will be supported by the country’s macroeconomic stability, increased public spending, and ongoing reforms to improve the business environment”, noted Jeffries.
According to the Asian Development Outlook (ADO) 2020 Update, an annual flagship economic publication released by the ADB, the Vietnamese economy will benefit from the continued persion of production from the People’s Republic of China to the nation, ongoing recovery in the Chinese economy, and the implementation of a free trade agreement with the EU.
The report outlines that slower-than-normal growth would serve to keep inflation subdued at 3.3% this year, before witnessing a slight rise to 3.5% in 2021.
The outlook for the country’s economy over the medium and long term remains positive, largely due to continued Vietnamese participation in a large number of bilateral and multilateral trade agreements which are expected to provide a boost for the nation’s economic during its rebound.
Furthermore, the report adds that it is likely the country will also be a beneficiary from the current shifting of supply chains to low-cost countries.
Through their report the ADB point out some of the potential risks that exist moving forward, with a prolonged global COVID-19 pandemic remaining the biggest danger to the nation’s growth outlook this year and into next year.
Moreover, another threat comes from escalating global trade tensions leading to a rise in trade protection, in addition to financial risks that could be exacerbated by the impact of a prolonged pandemic, the report says.