HCMC – The World Bank (WB), in a report released on September 28, maintained its forecast over Vietnam’s gross domestic product (GDP) growth this year at 4.8% and predicted the country could converge toward the pre-pandemic GDP growth rate of 6.5%-7% from 2022 onward.
The forecast was based on an assumption that Vietnam could bring the Covid-19 pandemic under control at the end of this quarter and the local economy could bounce back in the last quarter. In addition, a sustained global recovery would ensure strong demand for Vietnamese products in its main export markets, such as the United States, the European Union and China, the local media reported.
The WB was more optimistic about Vietnam’s economic outlook than other organizations, such as the Asian Development Bank, which forecast Vietnam’s GDP growth for this year at 3.8%. Some others predicted the growth rate at 3.5%-4% although the country’s GDP growth was negative this quarter.
According to the WB, Vietnam’s recovery process will be backed by mass vaccination drives, in which 70% of adults in Vietnam are expected to be vaccinated by mid-2022. However, the forecast will also depend on the risks, including the prolonged pandemic wave, disrupting economic activities.
In the remaining months of this year, monetary policies are expected to be eased and enterprises will have their loan payment deadlines extended. Fiscal policy would become more supportive with the faster execution of public investment, especially once mobility restrictions are rolled back.
Given the available fiscal space, the Government should deploy further resources to mitigate the adverse social impacts. Vietnam should pursue the goals of green growth and digitalization to improve the resilience and sustainability of its economy.
In addition, the country needs to increase its support levels and improve support programs in cash so that households and laborers in the informal sector can access these programs.