Research institute pegs Vietnam growth at 6-6.3 pct

By Thuy Tien   April 20, 2021 | 04:30 pm PT
Research institute pegs Vietnam growth at 6-6.3 pct
 A container ship docks at the Cat Lai Port in HCMC. Photo by Shutterstock/xuanhuongho.  
Several factors including effective pandemic control will help Vietnam grow 6-6.3 percent this year, according to the Vietnam Institute for Economic and Policy Research (VEPR).

The institute says that this year’s growth will be driven by the government successfully containing the pandemic in its early stages, the impacts of the EU-Vietnam Free Trade Agreement (EVFTA) and EU-Vietnam Investment Protection Agreement (EU-Vietnam IPA) that took effect last August.

It will be the result of faster disbursement of public funds, more companies shifting operations to Vietnam from China because of the U.S.-China trade spat, and macroeconomic stability.

These factors will create favorable conditions for the government to implement policies supporting economic growth, the institute says.

However, it also notes that the resurgence of Covid-19 in some countries will continue to disrupt the supply chain in 2021, thus making enterprises become more vulnerable. The geopolitical conflicts among some countries in the world may affect Vietnam’s open economy.

The institute identifies some weaknesses including infrastructure development not keeping up with a rapidly growing economy, a vulnerable banking system, and the dependence of the economy on foreign-invested enterprises.

Low quality human resources, slow equitization of state-owned enterprises are other hurdles to economic growth.

The institute recommends that reducing or deferring tax payments and other forms of assistance to Covid-19-impacted enterprises should continue.

Vietnam should also pay attention to the stock market and real estate market bubble.

"Ensuring macroeconomic stability is crucial for the post-pandemic economic rebound. Vietnam should also diversify its import and export markets to prevent being heavily dependent on a few economic partners," the institute recommends.

The country’s GDP growth was just 2.9 percent last year, though it was one of the few economies in the world to achieve positive growth instead of contracting, as happened with most other countries amid the pandemic.

The Vietnamese government has set an official growth target of 6.5 percent this year.

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