The World Bank forecast in a new report that Vietnam’s economy will expand by 6.8% in 2021, with the bank projecting a low growth rate of 4.5% and a high growth rate of 6.8%. The bank says in its report that Vietnam’s actual growth rate in 2021 will depend on global conditions amid the COVID-19 crisis.
While the Vietnamese economy has been seriously impacted by Covid-19, the WB says that it remains resilient and is poised to bounce back with both the short and medium term growth rates looking positive.
The World Bank quoted its report, “If the world situation gradually improves, economic activity should rebound in the second semester of 2020 so that the economy will grow at around 2.8% for the entire year (2020), and by 6.8% in 2021. With less favorable external conditions, the economy will expand by only 1.5% in 2020 and 4.5% in 2021.”
The bank notes that Vietnam’s main challenge is finding new drivers of growth to consolidate the expected recovery and that continued uncertainties both at home and abroad amid the global Covid-19 pandemic, will make it unlikely for the country’s foreign demand and private consumption to return to pre-crisis levels anytime soon.
Stefanie Stallmeister, Acting Country Director – Vietnam, for the World Bank said, “To adapt to the new normal, policymakers must find new ways to compensate for the weakening of the traditional drivers of growth while managing rising inequality.”
She adds, “By being ahead of the curve of the COVID-19 crisis, Vietnam has the unique opportunity to increase its footprint on the global economy and become a leader in tomorrow’s digital world.”
The WB recommends that Vietnam’s government should execute existing its existing public investment programs and provide targeted support to the private sector to avoid the COVID-19 economic trap and return to a trajectory of rapid and inclusive growth.
The report adds that Vietnam should make sure that resources are directed to those projects with the biggest positive impact on its economy and jobs, while minimizing technical and financial losses during implementation.
The global health crisis presents a unique opportunity for a contactless economy, spurring digital payment, e-learning, telemedicine, and digital data, which will help respond to the fast-expanding demand for quality services by the middle-class in the country.