Photo: consultancy.asia Hanoi (VNA) – Vietnam could resumepre-COVID-19 growth levels by next year although the pandemic threw a spannerin the works for the country’s thriving economic growth story, McKinsey &Company said in report published on Consultancy.asia.
According to the firm, two factors have combinedto cushion the blow of COVID-19 on Vietnam’s economy. For one, the country wassuccessful in containing the virus. In fact,reports highlight that the last report of community transmission of Covid-19 inVietnam was two months ago.
Lockdown in Vietnam lasted only three weeks,and the country has been among the first to open for business, it said.
The second conducive factor is the state ofVietnam’s consumer market, the firm said, adding that a growing middle classwith money to spend has led to a boom in the country’s consumer market, to theextent that domestic spending accounts for nearly 70 percent of Vietnam’s GDP.
Back in April, more than half of Vietnameseconsumers had reported a dip in spending, according to a McKinsey & Companyreport. GDP growth dipped to a decade-low in this quarter. However, the biggestcuts came in the discretionary spending segment, which fortunately accounts forjust over a quarter of the GDP.
More than 40 percent of Vietnam’s GDP,meanwhile, is driven by spending on necessities, which has remained robustthroughout the crisis and is expected to remain steady in its wake.
Both these factors mean that steadying theship is relatively less of a challenge for Vietnam in the context when supply chains across the globe were thrown off balanceby the lockdown, and Vietnam’s export numbers were affected by closures inChina and other key markets, leading to a 21 percent dip in FDI for Vietnam inthe first three months this year.
Forecasts suggest that most economies shouldbe up and running by the end of this year, while a degree of momentum shouldaccumulate by the middle of 2021. Provided that there is no second wave ofinfections, Vietnam could be up and running by this period. In fact, the AsianDevelopment Bank, the World Bank and the International Monetary Fund allpredict that Vietnam could reach a GDP growth rate of up to 7 percent by nextyear, the firm said./.
VNA
