Vietnam’s GDP expected to expand 7% in 2021-2025

An employee is at work at a workshop in Vietnam. Vietnam’s GDP is projected to increase by 7% in the 2021-2025 period - PHOTO: VNA

At a conference on opportunities and challenges from new-generation free trade agreements (FTAs) in 2021-2025, held in Hanoi recently, Tran Thi Hong Minh, director of the center, said that the participation in new-generation FTAs will have a positive impact on the country’s economy in the period, especially for exports.

The European Union-Vietnam Free Trade Agreement (EVFTA) is forecast to have a greater positive impact than the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), which has several members who have signed FTAs with Vietnam.

Both the EVFTA and CPTPP will help Vietnam’s GDP increase by 4.3% and 1.3% in 2030, respectively. In addition, the country’s export revenue from the European Union may rise by 44.4% by 2030 and from other members of the CPTPP by 14.3% by 2035.

The two FTAs will also positively affect the labor market, especially in labor-intensive sectors, such as textiles, garments and footwear.

Moreover, these FTAs are expected to help improve policies and the business environment, Minh added.

The National Center for Socio-Economic Information and Forecast, an arm of the Ministry of Planning and Investment, has drawn up two scenarios for the country’s economic development in the 2021-2025 period.

In the first scenario, which was considered the most feasible, Vietnam’s GDP may expand by 7%. In addition, the macroeconomy will be stable, inflation will be kept at 3.5%-4.5% per year and labor productivity will grow by some 6.3% per year.

In the second scenario, if Vietnam can grasp opportunities ushered in by the fourth industrial revolution and improve the quality of foreign investment, its GDP growth may reach 7.5%.

Tran Toan Thang from the National Center for Socio-Economic Information and Forecast said that the two FTAs have more commitments on investment and the handling of disputes than the World Trade Organization.

Vietnam should improve the internal strength of its economy, reform growth models, cultivate new internal driving forces and utilize opportunities from international integration and the fourth industrial revolution.

The management agencies should accelerate the reform of policies and the business environment, private sector development, technology application and labor productivity improvement.