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Vietnam’s GDP growth predicted at 2.1% this year

By Trung Chanh

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CAN THO – Despite a sharp plunge in gross domestic product (GDP) last quarter, Vietnam may still see an economic expansion of 2.1% this year if it reopens its economy and live with Covid-19 safely, said economic expert Nguyen Xuan Thanh.
He was speaking at an online seminar on October 1, themed “The picture of the economy of Vietnam and the Mekong Delta: economic forecasts for the last quarter of 2021 and prospects for 2022, jointly held by the Vietnam Chamber of Commerce and Industry in Can Tho City (VCCI Can Tho), the Vietnam International Arbitration Center (VIAC) and the Voice of Vietnam radio station.
VCCI Vice Chairman Vo Tan Thanh said the current fourth wave of Covid-19 infections had left a devastating impact on the Vietnamese economy.

He cited General Statistics Office data as saying the country’s GDP in the third quarter of this year fell 6.17%, the sharpest fall since the country calculated and announced the quarterly GDP.

The number of enterprises withdrawing from the market was higher than the number of newly-established ones. In January-September this year, 85,500 businesses were established, down 13.6% year-on-year, while 90,300 pulled out of the market, up 15.3%.

In the Mekong Delta, nearly 90% of businesses have suspended their operations over the past three months. Enterprises which can maintain their operations by allowing their workers to stay after work have been operating at 5%-10% capacity, Thanh added.

VIAC Chairman Vu Tien Loc cited the World Bank as saying that Vietnam reported economic growth of 6.64% in the first half of the year, one of the highest in the world. However, the fourth Covid-19 wave has reversed the situation.

The GDP decline of 6.17% last quarter was an unforeseen result, Loc said, adding that HCMC and some other localities, which have been the epicenters of the pandemic, might incur a double-digit fall each. The downward trend may continue if the situation does not improve.

Loc added 94% of enterprises nationwide had faced difficulties caused by the pandemic. In the southern region, 98% of firms have encountered heavy losses.

He said the global economy was expected to grow 5.6% this year. Meanwhile, Vietnam may lag behind and fail to reconnect supply chains.

Nguyen Xuan Thanh said Vietnam must reopen the economy in a sustainable manner and must not practice social distancing on a massive scale. If it reopens and later closes the economy again, the economy may collapse next year.

To reopen the economy sustainably and adapt to the pandemic safely, monetary and financial policies should support the economic recovery, even stimulate economic growth in 2022, Thanh said.

It is positive news that the country’s average inflation in January-September was less than 2%, while credit grew 7.2%.

By mid-October, many enterprises may resume their operations and the country’s GDP in the last quarter may expand 3.5% compared with the last quarter. However, it is difficult to reach a growth rate of 3.5% this quarter.

If the country reopens the economy hesitantly, the economic growth this quarter and the whole year will be below 2% and 1%, respectively.

If the country does not reopen the economy, the economy will not grow this quarter and the country will face negative growth this year, Thanh analyzed.

Support packages may not create an impact on the economy this year. The business community expects policies to help ensure macroeconomic stability and safe reopening. They should not be forced to apply the stay-at-work mode.

If their workers have received one Covid-19 vaccine shot or have yet to be vaccinated, high-risk ones should be subject to regular Covid-19 testing.

To reach expected economic growth, Thanh said Vietnam must resume work on public investment projects.

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