Covid-19 resurgence derails Vietnam economic growth plan

Ngoc Mai 11:44, 2021/02/03

Rising political, trade tensions and high public debts across economies in the world require Vietnam to have drastic measures to ensure the economic growth plan to stay on track.

Vietnam’s GDP growth in the first quarter is set to be slower compared to the original plan due to the ongoing resurgence of the Covid-19 pandemic.

Minister of Planning and Investment Nguyen Chi Dung (standing) at the meeting.

Minister of Planning and Investment Nguyen Chi Dung unveiled the information at a monthly government meeting on February 2.

“In case this outbreak is contained right in the first quarter, the GDP in the January – March period is estimated to expand by 4.46% year-on-year, 0.66 percentage points lower than the target set in government’s Resolution No.01,” said Mr. Dung.

With a lower-than-expected growth rate in the first quarter, in case the economy keeps up with the growth targets for subsequent quarters under the Resolution No.01 of 7.11%, 6.71% and 6.67%, the GDP growth rate for 2021 would be around 6.23%, higher than the target set by the National Assembly of 6%, but lower than the government’s aim of 6.5%.

According to Mr. Dung, to realize the GDP growth target of 6.5% under the resolution No.01, the GDP growth rates in the three remaining quarters should be at corresponding rates of 7.11%, 6.73% and 7.04%, for which the rates in the third and fourth quarters should be 0.02-0.37 percentage points higher than the original goal.

Mr. Dung, however, noted the Covid-19 impacts to the economy remain severe, referring to a high figure of enterprises temporarily suspending operation in January, along with low foreign investment capital and slow recovery process of the services and tourism sectors.

“The pandemic would cause negative impacts to Vietnam’s economy on both short- and long-term,” said Mr. Dung.

“Rising political, trade tensions and high public debts across economies in the world require Vietnam to have drastic measures to ensure the economic growth plan to stay on track,” stressed Mr. Dung.

In January, Vietnam’s industrial production index stayed higher than that of in the same period of last year, but declined by 3.2% against last December. In which, the manufacturing and processing, a key driving force for growth, was down 3.1%.

While this could be due to the fact that manufacturers were boosting production capacity in the final month of the year, Mr. Dung urged government agencies to monitor the situation and provide supporting policies if this downtrend continues.

In January, Vietnam posted a trade surplus of US$1.3 billion, while disbursement of public funds hit VND15 trillion (US$652.4 million), 3.25% of the year’s plan, significantly higher than the 0.95% rate recorded in the same period of last year, which Mr. Dung deemed as the positive points of the economy.