ADB pegs Vietnam growth at 3.8 pct

The figure is lower than ADB’s previous forecast of 5.8 percent in July and 6.7 percent earlier this year.

"The prolonged Covid-19 pandemic and extended lockdowns have weakened consumption and investment, hampering Vietnam’s growth prospects," said ADB’s Country Director for Vietnam Andrew Jeffries at an online press briefing Wednesday.

The strict lockdown in Vietnam’s southern region and in Hanoi and surrounding industrial areas, which contribute nearly half of the country’s GDP, dragged down the index of industrial production in August by 7.4 percent year-on-year.

In the first eight months of 2021, nearly 85,500 enterprises suspended operations, 24 percent higher than in the same period last year.

A total 12.8 million people lost their jobs or had their incomes reduced.

In August, wholesale and retail trade plunged by 34.9 percent year-on-year on the effects of the lockdown.

"The near-term outlook remains challenging. The main risk is the prolonged pandemic, especially if the country’s vaccination rate does not increase significantly," the report stated.

But ADB remains bullish on the country’s prospects in the medium and long term.

Growth could be aided by a revival of domestic demand, an acceleration in the disbursement of public investment, and an expansion to new export markets thanks to multiple free trade agreements and the expected global economic recovery.

"The Vietnamese economy would bounce back if the Covid-19 pandemic is brought under control by the end of 2021 and 70 percent of the country’s population are vaccinated by the second quarter of 2022.

The bank forecast a growth of 6.5 percent next year.

Vietnam’s GDP expanded 5.6 percent year-on-year in the first six months.

Several foreign organizations have also lowered growth forecasts for Vietnam.

HSBC anticipated a 5.1 percent growth this year, down two percentage points from earlier.

World Bank last month also cut its forecast by two points to 4.8 percent.