According to “Taking Stock, the latest World Bank’s economic update for Vietnam, the country’s prospects appear positive with the economy projected to grow 6.8% in 2021 and 6.5% in 2022 and 2023.
The World Bank’s projections are based upon the assumption that the COVID-19 crisis will be brought gradually under control in 2021, through the introduction of effective vaccines.
Although the World Bank is optimistic about Vietnam’s future, it notes that country could be exposed next year to financial, fiscal and social risks that require attention from the government.
Carolyn Turk, World Bank Country Director for Vietnam said, “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,.”
Turk adds that, “The authorities must tackle the environmental and climate challenges with the same sense of urgency as they have done with COVID-19 because the costs of inaction are already visible and will become increasingly irreversible. The recent tropical storms in Vietnam’s central region and rising air pollution in the country’s major cities are good illustrations of this fragility.”
In its report, the World Bank notes that Vietnam is expected to grow while the world economy is expected to contract at least by 4% amidst the biggest global shock of recent decades.
The World Bank’s report notes that Vietnam’s external sector - the main driver of economic growth in the country over the last 10 years - 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 World Bank report also notes that Vietnam’s continued inflows of foreign investment and the steady rise in merchandise exports have more than compensated for the losses in foreign exchange earnings from decreased tourism activities and shrinking remittances.
Because Vietnam has been “very successful” in managing the Covid-19 pandemic throughout this year, with exceptionally low infection and death rates, as well as a vibrant local economy, the country’s is seen as stable and foreign investors have continued investing and/or shifting production activities to Vietnam.
The World Bank also says that Vietnam should take the lessons that it has learned from the COVID-19 crisis and extend them to the country’s environmental agenda.
First, the best way to cope with an external shock is to be prepared in advance and move with early and bold actions. Second, beyond vision and capacity, the ability to embrace innovation and experiments is instrumental to change individual and collective behaviors.