Despite the recent resurgence of the Covid-19 pandemic in nearby countries, Vietnam is set to be the fastest-growing economy in the Southeast Asian region with an economic growth of 6.7% in 2021 and rise to 7% in 2022.

Singapore and Malaysia would remain second best to Vietnam with their respective estimated growth of 6% in 2021, but then decline to corresponding rates of 4.1% and 5.7% in next year.

GDP growth in developing Asia.

The growth figures were revealed in Asian Development Bank’s latest report on Vietnam’s economic outlook.

“Stagnant domestic consumption and weak external demand caused by the Covid-19 pandemic slowed down Vietnam’s economy last year, but the growth momentum remains strong this year and next, made possible by Vietnam’s success in controlling the spread of the virus,” said ADB Country Director for Vietnam Andrew Jeffries at the report launching event today [April 28].

“Gain in industry, especially export-oriented manufacturing, trade, and investment will boost growth in this year,” added Jeffries, saying the faster-than-expected economic recovery of major trading partners in China and the US would considerably expand Vietnam’s trade and support growth.

Meanwhile, Jeffries suggested inflation is expected to remain benign, as the rate could edge up to 3.8% in 2021 and 4% in 2022.

“This is largely due to rising international oil prices on the global economic recovery and increased domestic consumption,” he noted.

Overview of the conference. Photo: Nguyen Tung

Prolonged pandemic increases risks to the economy

Meanwhile, ADB’s Chief Economist Nguyen Minh Cuong warned the uneven global Covid-19 vaccine rollout could delay Vietnam’s return to its strong pre-pandemic growth path, given the country’s reliance on external trade.

“A quick revival of domestic private investment may worsen the risk of asset bubbles, if credit is not channeled to productive sectors,” Cuong said.

As Covid-19 impacts on income and poverty are significant, Cuong urged the government to adopt a long-term sustainable strategy to help the poor and vulnerable diversify their livelihoods through measures such as vocational training and improved access to microfinance for new businesses.

“A prolonged pandemic may transmit short-term economic impacts into medium- and long-term systematic problems,” Cuong asserted.

Over the medium and long-term, ADB’s Country Director Jeffries noted the economy outlook remains positive given resilient economy’s fundamentals.

“The country’s business environment continue to improve. The large number of bilateral and multilateral trade agreements in which Vietnam participates, promises improved opportunities for trade and investment and supports the country’s economic rebound,” he suggested.