First-quarter growth fairly impressive
Although economic growth in this first quarter was slower than the scenario set out in Resolution No. 01/NQ-CP dated January 01, 2021, Pham The Anh, chief economist from the Vietnam Institute for Economic and Policy Research under Hanoi National University’s University of Economics and Business, shares why this growth was truly encouraging.
Pham The Anh- chief economist Institute for Economic and Policy Research
Economic growth was below the expectations of Resolution 01, and it was not much higher than in the same period of 2020. How would you evaluate this?
In my opinion, this 4.48 per cent growth is rather impressive. First of all, although production and business activities were strongly developing in 2019 with a growth rate of 7.02 per cent for the whole year, it expanded only 3.68 per cent in the first quarter of 2020.
The first quarter this year, however, was quite different from the situation one year ago. While GDP growth in 2020 was 2.92 per cent, the lowest level since Vietnam embraced international economic integration, the GDP growth in this first quarter was higher.
Second, production and business operations were fairly stable during the first quarter of 2020, while Vietnam was dealing with the dual task of maintaining production and business as usual while containing COVID-19 during the first quarter this year.
Also, in 2021 Vietnam has suffered numerous difficulties from earlier periods such as the consequences of the US-China trade war, climate change, droughts, floods, sea level rise, saltwater intrusion, global recession in trade, plus pandemic drastic implications.
Looking back on these factors, economists agree that the country’s positive growth in this year’s first quarter has been acceptable and truly encouraging.
How would you explain this upbeat growth?
Agriculture this year has made a vital contribution to economic growth, accounting for 11.71 per cent of the national GDP. Its growth rate reached 3.16 per cent, contributing 8.34 per cent to the overall growth.
|The recovery of the processing and manufacturing industry has played an important role in economic growth in recent years.
The recovery of the processing and manufacturing industry has played an important role in economic growth in recent years. This segment in the first quarter of 2021 increased by 9.45 per cent, up 7.12 per cent compared to the same period last year when trade and travel around the world was normal. This has created momentum for exports to increase by over 24 per cent.
In fact, the export in this first quarter was expected to grow by 4-5 per cent, but was up 22 per cent instead, reaching $77.34 billion. Besides, foreign direct investment attraction has resumed and surged 18.5 per cent, showing incredible performance.
What are your expectations for GDP growth in the second quarter?
Just keeping the tempo, the second-quarter growth in 2021 must be at least 7-8 per cent. In 2020, GDP in the second quarter increased only 0.39 per cent, the lowest growth rate in history.
It is no wonder that GDP growth will stay high in the second quarter. In 2021, the world economy was forecast to increase by 4-5 per cent, even over 6 per cent according to international financial institutions. In fact, this year is just a reboot after the world economy fell more than 4 per cent last year.
Are there any difficulties that could hinder Vietnam's efforts to achieve the GDP growth target of 6-6.5 per cent for this year?
Global trade has faced unusual difficulties from the lack of containers for export-import activities, which has increased transportation costs. In Vietnam, this has challenged several goods categories like frozen and fresh products, food and foodstuffs which need to be preserved, especially during transportation. However, these items only make up a small proportion of total export turnover, while key export products like textiles, footwear, electronics, phone systems and components were not affected by this container shortage.
Besides, because people are accustomed to living in "COVID-19 times”, consumer demand for goods, services, as well as inputs of production and business continue as usual. In particular, inbound tourism that is anticipated to pick up during the upcoming holiday occasion of April 30 and May 1 is expected to help boost domestic consumption.