Vietnam’s economy to grow 2.6% in 2020 and 8.2% in 2021: Fitch

Due to a slower pace of recovery than previously anticipated, the organisation revised down its forecast for Vietnam’s 2020 real GDP to 2.6 percent from 3 percent.

However, it maintained forecast for an 8.2 percent rebound in 2021 on freer international movement of persons, which would support a tourism rebound and better containment success externally for most of the year, especially in major export destinations for Vietnam such as the US and Europe, which would support external demand.

The Government has estimated real GDP to have grown by 2.62% in third quarter, which reflects a recovery from 0.4 percent in the second quarter. This brought the real GDP growth for the first three quarters of 2020 to 2.1 percent, according to official estimates.

Fitch expects manufacturing growth to strengthen in the final quarter and into 2021 although a weak external economic environment could cap gains in this segment. Vietnamese manufacturing sector is already extremely dependent on trade, with exports at almost 110 percent of GDP.

China, Vietnam’s second largest export destination, appears to be showing promising signs of a V-shaped economic recovery following effective containment of its domestic Covid-19 outbreak.

On the European Union front, a likely diversion in trade towards Vietnamese goods supported by the ratification of the EU-Vietnam free trade agreement since August should support Vietnam’s exports to the bloc despite weaker import demand in general due to economic weakness in Europe, according to the report.

► Vietnam’s 9-month GDP growth falls to 9-year low at 2.12% on pandemic