WB: Vietnam’s economy could converge toward pre-pandemic rate from 2022 onward

A corner of HCM City. (Photo: Getty Images)

Hanoi (VNA) - Vietnam’s GDP isexpected to expand by about 4.8 percent in 2021, and the economy could convergetoward the pre-pandemic GDP growth rate of 6.5 to 7 percent from 2022 onward,the World Bank has forecast.

In its East Asia and Pacific Fall 2021 EconomicUpdate released on September 28, the bank said a sustained global recoverywould ensure strong demand for Vietnamese products in its main export marketslike the US, EU, and China.

According to the bank, aside from the second socialprotection support package, the government is considering tax relief to supportbusinesses.

Fiscal policy would become more supportive withfaster execution of public investment, especially once mobility restrictionsare rolled back, it said.

Vietnam’s GDP is expected to expand by about 4.8 percent in 2021. (Photo: VNA)

Given available fiscal space, the government shoulddeploy further resources to mitigate adverse social impacts, the bank said,suggesting Vietnam pursue the goals of green growth and digitalisation to raisethe resilience and sustainability of its economy.

In its September 2021 Vietnam Macro Monitoring, thebank also said the foreign direct investment (FDI) inflow suggests continuedconfidence in Vietnam’s economy.

WB experts explained that Vietnam’s economy stillgrew 2.9 percent last year against serious decreases seen in other countries.

Earlier, the Asian Development Bank (ADB) reviseddown Vietnam's 2021 GDP growth forecast from 6.7 percent to 3.8 percent due toa resurgence of the COVID-19 pandemic that has tightened the labour market,lowered industrial output, and disrupted agricultural value chains.

ADB remains bullish on the country’s prospects inthe medium and long term. Growth could be aided by a revival of domesticdemand, an acceleration in the disbursement of public investment, and anexpansion to new export markets thanks to multiple free trade agreements andthe expected global economic recovery.

The ADB also remains bullish on Vietnam’s prospects in the medium and long term. (Photo: AFP/VNA)

For the East Asia and Pacific region, the WB saidits recovery has been undermined by the spread of the COVID-19 Delta variant,prolonging the distress for firms and households, likely slowing economic growthand increasing inequality.

Economic activity began to slow down in the secondquarter of 2021, and growth forecasts have been downgraded for most countriesin the region.

While China’s economy is projected to expand by 8.5percent, the rest of the region is forecast to grow at 2.5 percent, nearly 2percentage points less than forecast in April 2021.  Employment rates and labor forceparticipation have dropped, and as many as 24 million people will not be ableto escape poverty in 2021.

“The economic recovery of developing East Asia andPacific faces a reversal of fortune,” said World Bank Vice President for East Asiaand Pacific Manuela Ferro. “Whereas in 2020 the region contained COVID-19 whileother regions of the world struggled, the rise in COVID-19 cases in 2021 hasdecreased growth prospects for 2021. However, the region has emerged strongerfrom crises before and with the right policies could do so again.”/.

VNA