Vietnamese economy likely to grow at 2.8% this year

During the event Assoc. Prof. Dr. Pham The Anh, chief economist of the Vietnam Institute for Economic and Policy Research (VEPR), stated that the country’s economic prospects for this year will largely be dependent on its capability to continue its success in containing the novel coronavirus (COVID-19) pandemic.

Growth prospects can be attributed to the enforcement of the EU-Vietnam Free Trade Agreement (EVFTA), according to Assoc. Prof. Dr. Anh, in addition to the impending ratification of the Europe-Vietnam Investment Protection Agreement (EVIPA), along with the disbursement and construction progress made with regard to key public investment projects.

Other positive factors include raw material costs maintaining their low rates due to reduced demand for consumption and production, while the country has also benefited from a shift of investment as financiers seek to avoid risks from the ongoing trade war between the United States and China.

Furthermore, investment incentives, coupled with a stable macro-economic environment with inflation curbed at a medium level, has facilitated the implementation of growth support policies.

According to experts, despite the negative impact of COVID-19 on the global economy, the nation was one of the few countries in the world to record positive economic growth in the third quarter of the year, enjoying an annual rise 2.62%, with nine-month GDP increasing by 2.12% on-year.

Throughout the opening nine months of the year, the country had approximately 99,000 newly registered enterprises, representing a fall of 3.2% in terms of the number of enterprises. In addition, there was rise of 10.7% in registered capital and a fall of 16.3% in terms of the number of employees compared to the same period last year, with the number of firms temporarily suspending their business operations rising by 81.8% from the same period last year.

Assoc. Prof. Dr. Anh pointed out that with the current global economic outlook being gloomy, the forecast for the next quarter will remain high, adding that the nation still faces challenges due to the potential resurgence of the COVID-19 outbreak globally, along with lockdown measures that could lead to prolonged periods disruption for global supply chains.

Moreover, the main weakness of the Vietnamese economy may come from external risks such as a large fiscal imbalance, the speed and level of development investment, along with the building of infrastructure slowing.

Although the health of the banking and financial system had gradually strengthened, it remains vulnerable, according to economists, adding that the economy is far more dependent on the growth of the FDI sector and lack of technological and raw material autonomy.

Therefore, VERP experts forecast that Vietnamese economic growth for the year will range between 2.6% and 2.8% providing that the COVID-19 epidemic remains under control domestically.

In the event that there are additional outbreaks of the epidemic locally during the final months of the year, the economy would probably see growth of between 1.8% and 2.0% or lower for the whole year, said Assoc. Prof. Dr. Anh.