Vietnam economy to grow 3% in 2020 despite COVID-19 crisis: World Bank

Khanh Minh Monday | 12/21/2020 22:05

Photo: Reuters

Vietnam’s GDP is expected to grow 3% in 2020 while the world economy is expected to contract 4% amidst the biggest global shock of the past decades, World Bank report said.

The Southeast Asian country has good economic performance to the resilience of both its domestic economy and external sector, World Bank commented.

Beyond the containment of the pandemic by bold, early and innovative measures, the Vietnamese government has also used its fiscal and monetary policies to provide breathing space to the private sector and jump start the recovery.

Public spending started rising again after three years of fiscal consolidation. The first nine months of 2020 saw a 40 percent year-on-year increase in the disbursement of the public investment program.

The external sector, the main driver of economic growth in Vietnam over the past decade, has performed exceptionally well since the beginning of the COVID-19 crisis. The country is on the verge of reporting not only its highest merchandise trade surplus ever but also an increase in international reserves.

The continued inflows of foreign investment and the steady rise in merchandise exports more than compensated for the losses in foreign exchange earnings from decreased tourism activities and shrinking remittances, according to the report.

The country’s economic growth is expected at about 6.8 percent in 2021 and, thereafter, stabilize at around 6.5 percent. World Bank made this projection with the assumption that the COVID-19 crisis will be brought gradually under control, notably through the introduction of an effective vaccine.

“Vietnam is standing at a crossroads of post-COVID-19 recovery. It has an opportunity to set itself on a greener, smarter, and more inclusive development path that will bolster resilience to future shocks from both pandemics and climate-related disasters,” said Carolyn Turk, World Bank Country Director for Vietnam. 

The report provides a detailed look at the policy toolbox that could help Vietnam stabilize the economy, reduce investment needs in the coming austerity period, and achieve climate targets in both the short and longer terms.

It argues that Vietnam’s ambition to become a high-economy will be determined not only by its capacity to exit successfully from the COVID-19 crisis but also how it will manage its natural resources and climate risks. After all, the objective of economic development should be as much as to create wealth as not to destroy it.

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