The Asian Development Bank (ADB) has revised up Vietnam’s economic growth forecast to 2.3% in 2020 from the previous estimate of 1.8% in September, citing the strength of accelerated public investment, revived domestic consumption, trade expansion, and rapid recovery in China as main reasons.

Such growth rate would be the highest in Southeast Asia, and expected to bounce back to 6.1% in 2021, according to the bank’s report released today.

The ADB also forecast Vietnam inflation would be 3.5% from 3.3% as floods in the center of the country may exert pressure on food prices.

In Southeast Asia, economic growth remains under pressure as Covid-19 outbreaks and containment measures continue, particularly in Indonesia, Malaysia, and the Philippines.

The subregion’s growth forecast for 2020 is revised down to -4.4% from -3.8% in September, while its outlook for 2021 is also downgraded, with Southeast Asia now expected to grow 5.2% next year compared to the 5.5% growth forecast in September, noted the ADB.

Overall, economic activity in developing Asia is forecast to contract by 0.4% this year, before picking up to 6.8% in 2021 as the region moves toward recovery from the effects of the Covid-19 pandemic.

The new growth forecast is an improvement from the -0.7% GDP growth forecast in September, while the outlook for 2021 remains unchanged.

“The outlook for developing Asia is showing improvement. Growth projections have been upgraded for China and India, the region’s two largest economies,” said ADB Chief Economist Yasuyuki Sawada. “A prolonged pandemic remains the primary risk, but recent developments on the vaccine front are tempering this. Safe, effective, and timely vaccine delivery in developing economies will be critical to support the reopening of economies and the recovery of growth in the region.”

Pandemic-induced lockdowns and restrictions have been eased in varying levels in the region, with merchandise exports rebounding quickly from substantial declines in the second quarter. Mobility is also returning to pre-Covid-19 levels in East Asia and the Pacific, where the spread of Covid-19 has largely been contained or prevented in recent months. A recovery in tourism, however, is likely to be delayed.