HCMC – The World Bank has revised its forecast for Vietnam’s gross domestic product (GDP) growth this year to 2%-2.5%, down from 4.8% forecast last month.
According to the World Bank, the new forecast was made based on the sharp 6.2% decline in the country’s GDP in the third quarter over the same period last year and the country’s economic recovery outlook this quarter as the two biggest economic hubs of the country—Hanoi and HCMC—have gradually eased restrictions, according to local news reports.
However, the reopening of the local economy will face challenges, including the shortage of labor and disruptions in industrial production and service provision, triggered by the exodus of workers from industrial manufacturing hubs due to months of social distancing.
To remove bottlenecks in logistics, the World Bank stressed that Vietnam needs to continue Covid-19 testing and vaccination and encourage the labor shift.
In addition, the competent agencies should apply expansionary fiscal policy and use various financial tools to support the economic recovery process. At first, they should simplify procedures on regular spending and development investment.
Further, the country should expand its support for workers from both formal and informal sectors and households so that they can overcome difficulties and return to work at the earliest.
Vietnam also needs to continue providing financial support to businesses to restart business activities, especially in the tourism, catering and lodging sectors.