Vietnamese Economy in 2021-2025: Take advantage of new opportunities to break through

Timely and effective measures to prevent the spread of Covid-19 have helped Vietnam maintain macroeconomic stability. This is also the foundation for the economic recovery in 2021 and in the medium term 2021-2025. Photo: TKTS

Two scenarios

Like most countries in the world, the Vietnamese economy was strongly influenced by Covid-19.

GDP growth in 2020 will decrease to 2.91% compared to the 6.5-7% forecasted figure before Covid-19.

The growth target for the 2016-2020 period has not been completed.

The serious effects of Covid-19 occur not only on macroeconomics, but also on the business community and households. Firms in almost every sector are affected and are struggling to survive. Two large-scale surveys with more than 130,000 enterprises by the General Statistics Office (April and September 2020) showed that over 83% of businesses claimed to be negatively affected. Similarly, individuals, households, and particularly vulnerable groups are being affected although the government's support package has been provided very early.

Assessing the difficulties and opportunities for Vietnam's economy in 2021 as well as in the 2021-2025 period, Deputy Minister of Planning and Investment Tran Quoc Phuong said timely and effective measures to prevent the spread of Covid-19 has helped Vietnam maintain macroeconomic stability. This is also the foundation for the economic recovery in 2021 and the medium term 2021-2025.

In addition, Covid-19 also formed or accelerated many new trends, reshaping international financial flows, trade and investment, especially shifting the supply chain, creating many challenges and opportunities for economic recovery in the long term.

“Taking advantage of new opportunities for economic recovery in 2021 and a breakthrough in the 2021-2025 period is important to achieve the goals set out in the Socio-Economic Development Plan for 2021-2025,” said Deputy Minister Tran Quoc Phuong.

According to Dr. Dang Duc Anh, Deputy Director of the National Center for Socio-Economic Information and Forecasting (NCIF), on the basis of assessing the influencing factors, the NIFC predicts Vietnam's economic growth in 2021 is likely to will hit a high level again. In the following years of the 2021-2025 period, Vietnam's economy may not be able to make a real breakthrough, because many internal difficulties have not been resolved, or tend to be even more severe after the pandemic.

On the basis of analyzing and evaluating the impacts and adjustments in the medium term 2021-2025, NCIF updated its forecast of economic growth in the period of 2021-2025 in two scenarios.

In the base scenario, the economic growth rate will reach about 6.3%/year in the 2021-2025 period. This scenario is with the assumption that risks of the Covid-19 pandemic are still present, the solutions to help the economy of the Government bring about a moderate efficiency while the international context remains at risk, prolonged instability; economic and trade growth is slow.

With a positive scenario, the average economic growth rate in 2021-2025 may reach nearly 6.8%/year, although the economy has a slight decrease after the high growth rate in 2021, but then will see stable recovery.

“Thus, the results of the average GDP growth forecast in the 2021-2025 period according to the latest forecast (December 2020) update the impact of the Covid-19 pandemic and changes in the domestic and international context, significantly reduced compared to NCIF's Covid-19 forecasts (December 2019). The adjusted GDP plan decreased by about 0.7% compared to the previous forecast, of which, the lower growth rate was mainly in the industrial, construction and service sectors.

Four main actions

In order for the economy to recover strongly after the Covid-19 pandemic, Ms. Wiesen, Chief Resident Representative of the United Nations Development Program (UNDP) in Vietnam, said that Vietnam's success in 2020 in achieving a high level of human development and the dual goal of preventing and combating the Covid-19 pandemic and economic growth are due to the quick leadership, the power to mobilize efforts and the spirit of innovation of the people and focus on people-centered development. In order for Vietnam to recover strongly from Covid-19 and leave no one behind, according to Wiesen, four main actions were needed.

It is to ensure that the rapid growth of manufactured exports is the main driver of sustainable employment and increased productivity and income. Second, harmonize the balance between economic growth and environmental protection, by transforming the economy (production and consumption) towards green growth and energy efficiency. The third is to develop the domestic capital market and improve the effectiveness and efficiency of using all development finance resources to achieve the Sustainable Development Goals. And finally, the need to continue to apply AAA governance methods (anticipation, adaptive and agile), creating a favorable environment for the experimentation and innovative solutions of the people and organizations in Vietnam.