Vietnam faces unexpected risks as global uncertainties continue

Vietnam’s economy has shown signs of recovery but the world is still reeling in the fight against Covid-19. As such, Vietnam needs to be well prepared for any upheaval.

Vietnam faces unexpected risks as global uncertainties continue

Vietnam reported a GDP growth rate of 4.48 percent in the first quarter of 2021 compared with the same period last year, the same growth rate as the fourth quarter in 2020.

The World Bank (WB) said though the growth rate was still lower than that in the pre-pandemic period, it still reflects the ongoing recovery of the economy, despite the third Covid resurgence in northern provinces in February.

However, it noted that while the process is going strongly, the recovery is not equal in all business fields and the service sector remains depressed. Domestic demand has not fully recovered from the Covid-19 shock.

The institution said that Vietnam may experience new shocks or prolonged difficulties in some fields. Appropriate agencies should consider fiscal and monetary measures if the crisis continues and the national economy cannot recover as rapidly as planned.

If Vietnam can make breakthroughs in reform, it will see improvement in growth quality, and the average GDP growth rate could reach 6.76 percent per annum, according to the Central Institute of Economic Management (CIEM).

Meanwhile, the Vietnam Institute for Economic and Policy Research (VEPR) said that Vietnam is facing risks and challenges amid an uncertain global economic environment. The resurgence of Covid-19 in many countries, together with lockdowns, are prolonging the supply chain disruption, affecting the resiliency of businesses.

Geopolitical conflicts among large countries may expose economies with high openness, such as Vietnam's, to unexpected risks.

According to VEPR, Vietnam’s economy faces internal risks, including fiscal imbalance; slow and low investment for development, especially investment in infrastructure, thus leading to low management efficiency; a vulnerable finance and banking system, despite recent improvements; heavy reliance on a foreign invested sector; lack of autonomy in technology and input materials; and low labor quality.

According to VEPR, the most useful policies in the current situation are supply-side policies to reinforce economic fundamentals.

However, VEPR believes that the establishment of the new Party and State apparatus, with the new government, promises a dynamic economic outlook in 2021 and afterwards.

Moreover, provided that the pandemic is controlled in Vietnam and the world’s economy begins recovering thanks to the gradual removal of blockades, VEPR predicts that Vietnam’s economy may see a growth rate of 6.2-6.3 percent this year.

V-shape recovery predicted for Vietnam

 

The Vietnam Chamber of Commerce and Industry (VCCI), at a ceremony on announcing the PCI 2020 (provincial competitiveness index), released a part of its special PCI 2020 survey on the impact of Covid-19 on businesses.

It said though Vietnam succeeded in controlling the pandemic in 2020, the impact on the economy, from the time of the breakout to the social distancing process, was very serious.

The PCI 2020 report said that though the administration made great efforts to assist businesses with support policies, companies still found it difficult to access the policies. Meanwhile, the support was not enough to recover the economy, because the damages caused by the crisis were very serious.

However, unlike other crises, crises caused by economic blockades can be reversed almost immediately. Vietnam’s economy, therefore, may see a V-shape recovery soon after the supply chains resume and workers are employed again.

VCCI believes that the market will recover in 2021 when consumers return to public places and demand for goods increases. Policymakers can be reassured by the fact that the government’s efforts to control the pandemic have brought positive effects. If an outbreak reoccurs, the Government’s decisions will be respected and implemented by people.

According to VEPR, as Vietnam’s international trade still relies on foreign invested enterprises, the country needs to quickly diversify FDI sources.

The container shortage around the globe and the Suez Canal traffic jam caused by the huge cargo ship Ever Given are evidence of the fragile structure of global supply chains. In the era of interwoven economies, Vietnam needs to take cautious steps when joining supply chains.

The tendency of relocating investments out of China will bring opportunities to Vietnam to diversify FDI sources and expand production capability.

According to VEPR, the most useful policies in the current situation are supply-side policies to reinforce economic fundamentals. These include policies on administrative reform and state management quality improvement, especially in localities. This will improve the business environment and benefit businesses and people. 

Ha Duy

Vietnam’s digital economy to hit 52 billion USD by 2025

Vietnam’s digital economy to hit 52 billion USD by 2025

Vietnam’s digital economy will likely reach 52 billion USD in value by 2025, according to the e-Conomy SEA 2019 report by Google, Temasek and Bain & Company.  

VEPR: Vietnamese economy could grow by 6.3 pct in 2021

VEPR: Vietnamese economy could grow by 6.3 pct in 2021

The Vietnamese economy could grow by about 6-6.3 percent in 2021, said chief economist Pham The Anh from the Vietnam Institute for Economic and Policy Research (VEPR) 

 
 

Other News

.
Multi-billion VND apartment buildings unoccupied in central Hanoi
Multi-billion VND apartment buildings unoccupied in central Hanoi
FEATUREicon  18/05/2021 

Many apartment buildings in Hanoi have been left idle for many years, even while many people seek accommodations.

Ben Tre takes different approach to change its fate
Ben Tre takes different approach to change its fate
FEATUREicon  18/05/2021 

“What should we do – continue to complain about difficulties to get subsidies from the state budget, or become self-reliant to rise up,” said Ben Tre Provincial Party Committee Secretary Phan Van Mai.

Old discarded clothes turned into expensive products
Old discarded clothes turned into expensive products
FEATUREicon  15/05/2021 

All old things, from clothes and guitars to motorbikes, can be recycled into useful and highly aesthetic items thanks to talented artisans.

Female scientist wants to start public awareness campaign about organ donations
Female scientist wants to start public awareness campaign about organ donations
FEATUREicon  16/05/2021 

Dr Do Pham Nguyet Thanh, born in 1995, an expert at the Biomedical Research Center under the Pham Ngoc Thach University of Medicine, has been honored as one of HCMC 2020 Outstanding Young Citizens thanks to her active contributions to the community.

Land price hikes stop, but property remains expensive
Land price hikes stop, but property remains expensive
FEATUREicon  15/05/2021 

Though land fever has eased, prices are still high. The apartments in projects in advantageous positions are being offered at sky-high prices of VND300-400 million per square meter.

Hanoi advised to follow Japan’s urban railway model
Hanoi advised to follow Japan’s urban railway model
FEATUREicon  16/05/2021 

The Tokyo-Tshukoba urban railway line was funded by converting land in 18 projects along the route. The land price in these areas soared from $1 per square meter to $5,000.

Covid-19 vaccine and the gap between countries
Covid-19 vaccine and the gap between countries
FEATUREicon  16/05/2021 

The US announcement to support the waiver of IP protection on Covid-19 vaccine has not been the good news that was previously expected.

9-year-old pupil becomes national master of chess
9-year-old pupil becomes national master of chess
FEATUREicon  14/05/2021 

At the age of nine, Hanoi’s Dau Khuong Duy has been granted the title national master of chess.

Phu Tho woman finds husband after 13-year absence
Phu Tho woman finds husband after 13-year absence
FEATUREicon  14/05/2021 

Thanks to a video posted on Tiktok, a woman in Phu Tho province has found her husband who was missing for 13 years.

The path for Vietnam to become owners rather than just wage earners
The path for Vietnam to become owners rather than just wage earners
FEATUREicon  17/05/2021 

Technology and innovation are the answers to the question about how Vietnam can to escape from doing only outsourcing for foreign partners.

Prime Minister sets strategic direction for information and communications sector development
Prime Minister sets strategic direction for information and communications sector development
FEATUREicon  14/05/2021 

Prime Minister Pham Minh Chinh, during a working session with the Ministry of Information and Communications (MIC) on May 11, assigned tasks and set strategic development goals for the time to come.

Steel manufacturer tries to revive after 10 years of being idle
Steel manufacturer tries to revive after 10 years of being idle
FEATUREicon  14/05/2021 

The expansion of the Thai Nguyen steel project has yet to be completed after 14 years. Several former managers of the Thai Nguyen Iron and Steel JSC (Tisco) have been sent to prison for wrongdoings related to the project.

Vietnamese enterprises lose their home market as they focus on land deals
Vietnamese enterprises lose their home market as they focus on land deals
FEATUREicon  15/05/2021 

Many enterprises would rather use their capital to buy and sell land than make investments to scale up their production.

Poor people lose chance to buy houses with funds from gov't preferential credit package
Poor people lose chance to buy houses with funds from gov't preferential credit package
FEATUREicon  13/05/2021 

As the VND30 trillion preferential credit package has ended, many realtors and clients have fallen into a difficult situation.

Brother-sister pair wins Asian championship in skating
Brother-sister pair wins Asian championship in skating
FEATUREicon  13/05/2021 

Falling passionately in love with ice dancing in childhood, the skating siblings Minh and Chi could not imagine that the sport would ever bring such honors to them.

With over US$1 billion, a new Vietnamese billionaire is revealed
With over US$1 billion, a new Vietnamese billionaire is revealed
FEATUREicon  13/05/2021 

The assets of the richest people in Vietnam have risen sharply in recent times. Many tycoons have earned huge recently.

Lessons from the Covid-19 'tsunami' in India
Lessons from the Covid-19 'tsunami' in India
FEATUREicon  12/05/2021 

Proactively protecting yourself, going out only when absolutely necessary, fulfilling medical declarations, strictly following the 5K message, and installing the Covid-19 tracking app Bluezone are the best ways to prevent the spread of Covid-19. 

Land fever: speculators spread rumors to push prices up
Land fever: speculators spread rumors to push prices up
FEATUREicon  12/05/2021 

Land prices recently soared by VND30-50 million per square meter in some places, but the number of successful transactions was modest.

Vietnam’s pho sold under Chinese brand, fish sauce marked with Thai brand
Vietnam’s pho sold under Chinese brand, fish sauce marked with Thai brand
FEATUREicon  12/05/2021 

Vietnam’s ST25 rice is at risk of having its brand stolen in the US and Australian markets. Losing brands is the heavy price that Vietnamese enterprises will pay for their inappropriate attention to trademark register.

Investors prefer trading in land, shun the less profitable auto industry
Investors prefer trading in land, shun the less profitable auto industry
FEATUREicon  14/05/2021 

Vingroup has sent a dispatch to the Ha Tinh provincial People’s Committee, proposing a project on an automobile complex.

 
 
 
Leave your comment on an article

OR QUICK LOGIN