Due to the complicated progression of the Covid-19 pandemic globally, the Asian Development Bank (ADB) has revised down Vietnam’s GDP growth forecast to 4.1% for this year from the previous 4.8%.

The latest projection, however, still makes Vietnam the fastest growing economy in Southeast Asia.

ADB revises down Vietnam GDP growth forecast to 4.1% in 2020 amid growing Covid-19 impacts.

Vietnam’s economic growth is expected to bounce back to 6.8% in 2021, stated the ADB in its latest supplement of the Asian Development Outlook (ADO) 2020 released in April.

Growth in Vietnam decelerated to 3.8% year on year in the first quarter of 2020 but regained some strength in May since the lifting of social distancing in mid-April. Agriculture stagnated under lower external demand for agricultural exports and prolonged drought. Growth in services was halved from 6.5% in 2019 to 3.2% year on year in the first three months of 2020.

A strong uptick in domestic tourism in May was not enough to offset a 98% drop in foreign tourists compared to the same period of last year.

Meanwhile, the trade surplus in January to May declined significantly as demand from the economy’s principal export markets plunged. Growth of agriculture, industry, and services is forecast to continue to decelerate in 2020 due to sharp fall in external demand.

Although domestic consumption has revived in May, it still lacks steam because corporate and individual incomes have declined, stated ADB.

At a regional level, the ADB forecast growth of 0.1% for developing Asia, which is down from the 2.2% forecast in April and would be the slowest growth for the region since 1961. Growth in 2021 is expected to rise to 6.2%, as forecast in April.

“Economies in Asia and the Pacific will continue to feel the blow of the Covid-19 pandemic this year even as lockdowns are slowly eased and select economic activities restart in a ‘new normal’ scenario,” said ADB Chief Economist Yasuyuki Sawada. “While we see a higher growth outlook for the region in 2021, this is mainly due to weak numbers this year, and this will not be a V-shaped recovery. Governments should undertake policy measures to reduce the negative impact of COVID-19 and ensure that no further waves of outbreaks occur.”