Vietnam GDP growth in 2020 is set to reach 2.5%, thanks to strong growth in public investment and exports that offset declines in foreign investment and domestic consumption, according to economist Nguyen Xuan Thanh, a lecturer from Fulbright University of Vietnam.
Economist Nguyen Xuan Thanh. Photo: Quy Hoa/Nhip Cau Dau Tu.
Domestic production and exports are key driving forces for Vietnam’s economy this year, stated Mr. Thanh at an investment conference held by the Nhip Cau Dau Tu (BusinessReview) magazine last week.
From a regional perspective, countries that are relying on services for growth would continue to struggle amid the Covid-19 pandemic, while Vietnam with a focus on production is on the recovery track, he noted.
In September, the manufacturing and processing sector expanded by 4.6% month-on-month, resulting in an average growth rate of 3.8% in the first nine months this year. Strong growth was recorded in the sector of domestic production and basic necessities, including pharmacy, paper, chemical, construction material, while textile, footwear, automobile, food and beverage, among others, declined.
Sharing the same view, General Director of Deloitte Vietnam Pham Van Thinh said production would remain the driving force for growth and investment capital in 2021.
Although Vietnam’s economic expansion in the first nine months of 2020 recorded a 10-year low of 2.12%, the country is among a handful of economies that have delivered positive economic growth.
At present, both domestic and international institutions are expecting Vietnam’s economic growth at around 1.8 – 3% for this year, and then rebound to 6–8% next year.
FDI key for Vietnam GDP growth in 2021
In his own prediction, Mr. Thanh said Vietnam’s economy could expand by 6.9% in 2021, in which foreign direct investment (FDI) would play a pillar for such growth, adding many projects suspended in 2020 due to the pandemic would be resumed next year and serve as a boost to the economy.
Specifically, this includes merger and acquisition (M&A) projects, existing ones that are bound to resume, and a shift of the current investment capital.
Meanwhile, Mr. Thanh anticipated a positive outlook for manufacturing and processing with the enactment of the EU – Vietnam Free Trade Agreement (EVFTA) and recovery in exports to major markets in Asia, including South Korea, Japan and China, among others.