Two main drivers of economic growth in the fourth quarter of 2021

Exports are one of the two main growth drivers of Vietnam in the last months of the year. Photo: Nguyen Thanh.

Full-year growth could reach 2.5%

Assessing the economic situation in the third quarter and growth forecasts for the whole year of 2021, Assoc. Dr. Pham The Anh, chief economist of the Institute for Economic and Policy Research (VEPR), said that from the GDP figures of the third quarter, it can be seen that the economy is in a very serious decline.

Moreover, Vietnam is under great pressure from FDI enterprises temporarily transferring some orders to third countries, because they cannot meet the domestic production schedule.

This is a temporary move, but it can also be a long-term one if we do not change appropriate anti-pandemic measures, do not guarantee the circulation of goods and domestic production.

Based on what is happening in the economy, VEPR has proposed two growth forecast scenarios for Vietnam from now to the end of the year.

According to the worst-case scenario, the disease is likely to re-emerge in Vietnam. The situation of “open-close” repeated in some places where infections appeared, causing damage to production. Some orders continued to leave Vietnam because the production schedule could not be guaranteed. Labor shortage may occur because workers are still insecure. Rising costs cause many industries to shrink, especially in agriculture.

Accordingly, the level of impact of Covid-19 on the agriculture, forestry and fishery, manufacturing, processing and manufacturing sectors and the service sector will be more severe than the current one. Economic growth for the whole year 2021 is forecast at 1-1.5%.

In the better scenario, in the condition that the whole country can agree on measures to adapt to the pandemic and ensure that the production and circulation of goods are not disrupted. Production and consumption activities recover slowly but surely, economic centers complete vaccination plans in the fourth quarter of 2021. The lockdown situation as in the third quarter will not be repeated. Accordingly, the whole year economic growth is forecast at 2-2.5%.

Two growth drivers

In addition to benefiting from the shift of FDI inflows, Vietnam also benefits from demand-stimulating policies and the recovery of the global economy, including Vietnam's major export partners. The recovery of Vietnam's economy will be very strong if the country does not implement “social distancing" like in the third quarter, Vietnam's manufacturing industries for export will promote growth.

Regarding public investment, disbursement of public investment in the first nine months of the year only reached about 40% of the plan, if the Government focuses on promoting public investment, it will help improve economic growth. However, he noted, the Government needs to focus on national key projects and infrastructure projects because this not only helps the economy’s growth in the short term but also impacts the economy in the long term.

In order to achieve high growth in the last months of the year, Assoc. Prof. Dr. Nguyen Khac Quoc Bao also said that the most urgent and short-term measure is to make trade and people's travel easier to catch the year-end shopping season. Because this is the occasion when the total demand of the economy increases every year, the last quarter of the year is also the quarter with both personal and institutional investment and consumption activities increasing.

In addition, provinces, cities and localities need to implement the contents of Resolution 128 of the Government drastically, consistently, synchronously and flexibly.