Bright outlook for final-quarter GDP growth
Bright outlook for final-quarter GDP growth
The agricultural sector remained a pillar of Vietnam’s economy in the first nine months of the year. In addition, import-export turnover and foreign direct investment (FDI) also saw an impressive increase.
Nine-month import-export turnover increased by more than 24.4 percent |
Negative GDP growth unlikely
Vietnam’s gross domestic product (GDP) growth in the third quarter of 2021 decreased by 6.17 percent from the same period last year, the sharpest decline since Vietnam announced its quarterly GDP results. In total, the country’s GDP in the first nine months of 2021 increased by only 1.42 percent compared to a year ago, preventing Vietnam from achieving the 2021 six percent growth target set by the National Assembly and 6.5 percent set by the government.
Nguyen Thi Huong, director-general of the General Statistics Office of Vietnam, said the possibility of negative GDP growth in 2021 is unlikely as economic growth in the final quarter of the year is forecast to be higher than the 4.48 percent recorded in the first quarter and equivalent to 6.61 percent recorded in the second quarter.
According to Huong, bright spots in Vietnam’s economic picture are important bases for positive growth forecasts in the final quarter of the year. First, the agricultural sector remained a pillar of Vietnam’s economy in the third quarter and the first nine months of the year with growth of 1.04 percent and 2.74 percent, respectively. Second, import-export turnover in the first nine months of 2021 increased by more than 24.4 percent compared to a year ago, reaching over US$483 billion. During the reviewed period, total newly registered and adjusted capital saw a year-on-year increase of 20.6 percent and 25.6 percent, respectively. These positive signals are expected to help the Vietnamese economy grow in the final quarter of the year.
Nguyen Dinh Cung, former director of the Central Institute for Economic Management (CIEM), said there are positive factors creating momentum for recovery and growth in the final months of the year. These include rapidly increased vaccine coverage, especially in large urban areas and economic centers; increasing control of the Covid-19 pandemic; inflation of less than four percent; and stability of the economy, the monetary market, credit, exchange rates and interest rates. In addition, policies to support pandemic-hit businesses and individuals have proven effective.
The manufacturing and processing sector records the highest contribution to Vietnam’s GDP growth |
Three percent GDP growth
Vietnam has switched its strategy from “Zero Covid-19” to safe and flexible adaptation to the pandemic. To implement the strategy, the country is easing social distancing restrictions gradually and partially opening the local economy, while promoting mass vaccinations and implementing solutions to support economic growth.
Singapore-based United Overseas Bank (UOB) lowered its 2021 GDP growth forecast for Vietnam to three percent, but retained its outlook of 7.4 percent for 2022.
The Ministry of Planning and Investment has projected the country’s GDP growth in 2021 at 3-3.5 percent. The annual growth rate may reach this target if the final-quarter figure surpasses 7.06 percent or 8.84 percent, respectively.
Deputy Minister of Planning and Investment Tran Quoc Phuong said Vietnam used to achieve a quarterly GDP growth of over seven percent in the past. However, economic growth in the final quarter will depend much on safe and flexible adaptation to the pandemic. To achieve the targets, enterprises must be allowed to resume their operations, Phuong said, adding that workers should be helped to return to work so that enterprises can operate in the new normal. In addition, the smooth circulation of goods should be ensured.
