No need to revise GDP growth target, expert says

No need to revise GDP growth target, expert says

Vietnam’s 6.5 percent gross domestic product (GDP) growth target in 2021 set out in Resolution 01/NQ-CP will be hard to achieve. However, Vietnam is likely to realize the GDP growth target of six percent set out by the National Assembly, experts said, emphasizing that Vietnam needs to accelerate vaccinations as the economy depends greatly on pandemic control.

The manufacturing and processing sector is affected by Covid-19

Possible target

Le Trung Hieu, director of the System of National Accounts Department under the General Statistics Office of Vietnam, said Vietnam’s economy expanded by 5.64 percent in the first half of the year. To achieve the 6.5 percent growth target for the whole year, 7.2 percent growth must be achieved in the second half of the year. Given the complicated developments of the Covid-19 pandemic in Ho Chi Minh City and southern provinces, it will be a challenging task.

In particular, the Covid-19 pandemic has hit Vietnam’s manufacturing and processing sector, as reflected in a decline of the monthly index of industrial production in the second quarter of the year. Specifically, the index saw a year-on-year increase of more than 26 percent in April, but only rose by 11.4 percent in May and over eight percent in June.

Hieu said the GDP growth target of six percent in 2021 set out by the National Assembly is completely feasible if the pandemic is controlled soon and synchronous government solutions prove effective. The recovery of many economies and a strong increase in world demand will facilitate export activities, thereby promoting the development of the local economy.

There is no need to revise the growth target, Hieu said, adding that based on the diverse growth scenarios updated by the General Statistics Office of Vietnam, the government should provide appropriate instructions for each ministry, sector, and locality to reach the highest possible GDP growth.

Enterprises implement the “3 on-site” model for business continuity

High hope for mass vaccinations

Vietnam should not be subjective given that the pandemic remains complicated in many localities across the country, affecting enterprises’ trade and production activities and people’s daily lives as well as the GDP growth target for the whole year.

Minister of Planning and Investment Nguyen Chi Dung said businesses are facing many difficulties. Those include a cash flow shortage, which hampers payments to cover expenses and maintain trade and production activities; high input and transportation costs, resulting in a shortage of raw materials and an increase in production costs; disrupted supply chains; and obstacles to circulation of goods due to social distancing and travel restrictions.

Economist Le Duy Binh said Vietnam’s economic growth in the final months of the year depends greatly on pandemic control. As soon as the pandemic is brought under control and economic activities return to normal, growth will rebound, Binh said.

Nguyen Minh Cuong, chief economist of the Asian Development Bank (ADB) in Vietnam, underlined the importance of vaccinations as a driving force and hope for economic recovery. Cuong also said many domestic and foreign investors are also looking at the overall vaccination rate across the country to make decisions on investment and production expansion in Vietnam, proving that mass vaccinations are extremely important to achieve growth targets.

VietNam Economic News