Vietnam’s top 10 economic developments in 2020

Vietnam’s top 10 economic developments in 2020

The Editorial Board of Vietnam Economic News has listed the year’s top 10 economic developments.

1. Ensuring public and economic health The year 2020 was a special year with the regional and global situation changing quickly and the Covid-19 pandemic affecting all aspects of life. Under the leadership of the party, the entire political system fully fulfilled the dual task of fighting the pandemic and maintaining a stable environment for socioeconomic development. Vietnam’s gross domestic product (GDP) growth was reported at 2.91 percent in 2020. According to estimates, global GDP declined by 4.5 percent, while growth in China, the US, the Euro area, Japan and Singapore dropped by 1.8 percent, 5.3 percent, eight percent, 5.4 percent and 6.2 percent, respectively.

2. Issuing support policies to overcome difficulties facing the economy The government issued a series of policies to support those affected by the Covid-19 pandemic, such as extending the payment deadlines of value-added tax (VAT), corporate income tax (CIT), personal income tax (PIT), and land rent fees, helping businesses recover production and overcome difficulties. The prime minister also signed a decision to support people facing difficulties caused by the Covid-19 pandemic. Accordingly, about 20 million people belonging to seven groups of beneficiaries will benefit from this support policy, with a budget of more than VND62 trillion.

3. Major trade treaties The EU-Vietnam Free Trade Agreement (EVFTA) took effect on August 1, opening up great opportunities for Vietnamese firms to enter the EU market with a combined GDP of US$15 trillion. The United Kingdom-Vietnam Free Trade Agreement (UKVFTA) was officially inked on December 29. Vietnam will save VND3.42 trillion in tariffs from the deal, while the UK stands to save around VND1.08 trillion. The 10-member ASEAN bloc and five of its major trade partners signed the Regional Comprehensive Economic Partnership (RCEP) on November 15. The 15 member countries account for about 30 percent of the world’s population and 30 percent of global GDP, making it the biggest trade bloc in history.

4. Record trade surplus According to the latest data from the Ministry of Industry and Trade, Vietnam exported goods worth an estimated US$281.5 billion in 2020, up 6.5 percent compared with 2019. The country imported goods worth an estimated US$262.4 billion in the same year, up 3.6 percent from 2019. As a result, Vietnam enjoyed a record trade surplus of nearly US$19.1 billion, almost twice the 2019 level of US$10.87 billion and a nearly 11-fold increase compared to 2016. Some 31 commodities recorded export turnover of more than US$1 billion, accounting for 92 percent of the country’s total exports. Of these, six commodities saw export turnover of more than US$10 billion.

5. Public investment disbursement highest in a decade Public investment disbursement met more than 90 percent of the 2020 target, hitting its highest level in the 2011-2020 period. Public investment is considered the main source of economic growth. The highest volume in a decade was attributed to government management.

6. Interest rate adjustment to support the economy In 2020, the State Bank of Vietnam adjusted annual interest rates three times for a total reduction of 1.5-2 percent, contributing to credit institution liquidity and boosting the country’s economic growth amid the Covid-19 pandemic.

7. Stock market, an efficient capital mobilization channel Since its launch on July 28, 2000, the Vietnamese stock market has developed significantly in terms of size and quality, becoming an efficient capital mobilization channel for Vietnam’s economy and a useful instrument for the government’s macroeconomic management. As of November 30, the capitalization of Vietnam’s stock market reached more than VND6,110 trillion, climbing to 101.33 percent of GDP.

8. Major transportation projects Work on three sections of the North-South Expressway started in late September, including Mai Son-National Route 45, Vinh Hao-Phan Thiet, and Phan Thiet-Dau Giay. Total investment capital for the three projects was more than VND35 trillion. Many other large-scale projects were also launched, such as the My Thuan 2 Bridge connecting the provinces of Tien Giang and Vinh Long with total investment capital of more than VND5 trillion, and upgrading the runways at Noi Bai and Tan Son Nhat international airports with total capital of more than VND4 trillion.

9. Nearly 300 foreign firms planning to expand investment in Vietnam Total newly registered capital, adjusted capital and capital contributions or share purchases by foreign investors in Vietnam reached US$28.53 billion in 2020, a drop of 25 percent compared with 2019, because of a sharp decline in global investment due to the impact of the Covid-19 pandemic. However, Vietnam remained attractive to foreign investors thanks to its competitive advantages and strong reforms of the investment environment, as well as effective Covid-19 prevention and control. Nearly 300 foreign firms have reported plans to expand investment in the country.

10. The manufacturing shift to Vietnam Samsung Electronics Vietnam started construction of its largest research and development center in Southeast Asia in the new Hanoi district of Tay Ho Tay in March. In September, Pegatron, a manufacturing partner of the world’s major tech firms such as Microsoft and Apple, announced a US$1-billion investment to build a manufacturing complex in the Nam Dinh Vu Industrial Zone in the northern port city of Hai Phong. Political and macroeconomic stability, effective Covid-19 prevention and control, a growing and young population have provided Vietnam with an opportunity to become a new global production hub.

VietNam Economic News