The first forecast on economic growth in 2021

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Do not expect a jump in economic growth in 2021. Photo: H.Anh

GDP in 2021 is expected to increase by 6-6.5%

Regarding the expected socio-economic development plan for 2021, according to Minister of Planning and Investment Nguyen Chi Dung, the Vietnamese economy is forecasted to still face many challenges. Although the Covid-19 pandemic shows signs of easing, there are many potential risks andunpredictable factors that are highly likely to last for the whole of 2021.

In that context, the global economic outlook is very difficult, the major countries' economies are also in a state of recession, make it difficult to recover in the short term and return to the previous state. When the Covid-19 pandemic broke out, it will take about 2-4 years depending on the level of impact.

With the Vietnamese economy, the second wave of Covid-19 had a serious impact on many economic sectors, of which the sector most affected was services. That means Vietnam's economic growth in 2020 is likely to be low.

According to the scenario given by the Ministry of Planning and Investment, it will be about 2%, striving to 2.5%. This growth will affect the 2021 economic growth target.

The economic picture according to the initial prediction of the Ministry of Planning and Investment is shown in important indicators, of which, GDP growth in 2021 is 6.7% compared to 2020, GDP per capita in 2021 is about US$3,885/person.

The proportion of manufacturing and processing industry in 2021 will reach about 24.7% of GDP; the contribution of the total factory productivity togrowth in 2021 will reach about 45-47%, the social labor productivity growth rate in 2021 will reach about 4.8% and the urbanization rate will reach about 40.5-41.5%.

Regarding some major balances in 2021, according to the Ministry of Planning and Investment, GDP scale at current prices is estimated at nearly VND9.2 quadrillion.

Regarding the balance of import and export of goods, the total import-export turnover reached over US$554.4 billion, up 5.2% compared to 2020, of which, export turnover increased by about 5%, import turnover increased by about 5.4%, export surplus is about 2.3%.

The overall goal in the socio-economic development plan for 2021 set by the Government is to focus on overcoming difficulties, restoring the economy, taking advantage of opportunities to promote rapid and sustainable economic growth on the basis of macroeconomic stability and the implementation of sustainable development goals to 2030. Improve productivity, quality, efficiency and competitiveness of the economy.

A remarkable point of the socio-economic picture of 2021 is that, for the first time in the formulation of the socio-economic development plan 2021, the Ministry of Planning and Investment has proposed 23 socio-economic development indicators compared to 12 targets for the 2016-2020 period.

In which, a number of indicators are included in the economic sector such as the proportion of processing and manufacturing industries in GDP, the proportion of the digital economy in GDP, and the share of the total factor productivity (TFP) to the growth.

However, regarding the issue of GDP growth in 2021, at the regular meeting of the Government in August 2020, Prime Minister Nguyen Xuan Phuc assigned the Ministry of Planning and Investment to continue reviewing and completing growth scenarios and executive direction plans for the third and fourth quarter as well as for the 2020 - 2021 Socio-Economic Development Plan to report to the Politburo and the National Assembly, in which, the Prime Minister noted that the growth rate in 2021 is about 6-6.5%.

GDP 2021: Do not expect a jump

Thus, the economic growth index mentioned above has been adjusted compared to the Prime Minister's directive in Directive 31/CT-TTg on the formulation of socio-economic development plans andthe state budget estimate in 2021. In this directive, the Prime Minister asked, on economic growth, to strive for the GDP growth rate of the whole country in 2021 of about 7%. Besides, in terms of budget revenue estimates in 2021, striving to estimate domestic revenue from production and business activities in 2021, the national average will increase about 9-11% compared with the estimate made in 2020. Revenue from import-export activities in 2021 increases on average about 4-6% compared to the estimate made in 2020. This changeshows that the Government has been very cautious in building plans for 2021 and the unpredictable fluctuations of the economy during the Covid-19 pandemic. And this index may continue to change in the future.

To achieve the goals, the Government has identified many important solutions, especially, according to the Ministry of Planning and Investment, in order to promote and diversify export and import, the Government will continue to closely monitor the developments of the pandemic in countries such as China, South Korea and the US to take timely measures in situations that occur, prioritize the deployment of promotion to export markets that recover after the pandemic.

At the same time, increase the mobilization and efficient use of investment resources of the economy; focus on promoting the progress of important projects such as North-South Expressway, urban railway projects in big cities, focusing on investment, upgrading and expanding international airports of Tan Son Nhat, Noi Bai, Da Nang and investment in phase 1 of Long Thanh International Airport.

According to economist Nguyen Tri Hieu, it is very difficult to forecast the economic growth of 2021 because from now to the end of 2020, there are many developments affecting the economy. Currently, the global economy is in decline, while Vietnam's economy relies heavily on the global economy, not to mention other issues such as the US-China trade war that is likely to be more tense when the US presidential election is approaching. These factors make the world economy more uncertain, so it is difficult to forecast the economy this year, not to mention 2021.

According to this expert, if the pandemic is controlled in 2021, public investment will continue to be the main driver of growth for 2021. In addition, many financial instruments should be used to support agriculture and 2021 is not the time to expect much in tourism. In addition, trade agreements can be a tool to develop exports, but should not be too optimistic with those agreements, because if the world economy falls into a dead end, exports will be affected.

Economic growth projected to reach about 7% in 2021 Prime Minister Nguyen Xuan Phuc has issued a directive on the building of plans for socio economic ...