Hanoi’s economy is set for a strong rebound to 7.5% from an estimated of 3.94% for this year, as the city continues to push for economic restructuring, according to Vice Chairman of the Hanoi People’s Committee Le Hong Son.

Mr. Son was speaking at an opening session of the 15th municipal People’s Council on December 7.

“While the city falls short of the economic growth target of 7.5% for this year, a 3.94% economic growth would be 1.5 times higher than the national average,”Mr. Son said.

Overview of the session.

In 2020, the construction industry could record the highest expansion rate among all economic sectors at 8.66% year-on-year, mainly thanks to the city’s strong push for disbursement of public funds, which was followed by industry (5.64%), agriculture (4.02%) and services (3.10%).

An early control of the Covid-19 pandemic helped the city focus on socio-economic development efforts, noted Mr. Son.

One of Hanoi’s highlights in economic development is the state budget revenue that could reach VND279.35 trillion (US$12.07 billion) in 2020, or 100.2% of the estimate and up 3.5% year-on-year, he added.

While the Covid-19 has disrupted global supply chains, Hanoi’s export turnover for this year is on track to expand by 3.5% year-on-year to US$16.2 billion, and imports of US$30.3 billion, down 4.2% year-on-year.

A stabilized macro-economic environment also eases inflationary pressure, with the CPI staying in range of 2.73 – 2.79% in 2020, significantly below the 3.77% rate in one year ago.

Vice Chairman of the Hanoi People's Committee Le Hong Son.

“Hanoi authorities continue to support investors and enterprises to overcome current economic crisis, aiming to ensure a healthy and fair business/investment environment for all economic components,” Mr. Son stressed.

Hanoi remained in 9th spot among the top 10 business-friendly localities in Vietnam for two consecutive years.

Despite the fact that the city’s ranking stayed unchanged at ninth, its PCI score has improved from 65.4 to 68.8 in 2019, showcasing strong efforts from the local authorities towards administrative reform and creating a favorable business environment for enterprises.

Among the 10 PCI sub-indices, Hanoi has the highest score in Entry Costs, which evaluates entry costs for business startups, at 7.98 points out of 10, and the lowest at 5.39 in Policy Bias, an indicator assessing the possibility of crowding out of private activity from policy biases toward state, foreign or connected firms.

Regain growth momentum

“The main objective of Hanoi is to regain the growth momentum and accelerate the economic restructuring process,” stated Vice Chairman Son.

A GRDP growth target of 7.5% for next year would translate into an income per capita of VND135 million (US$5,800), significantly higher than the national average of US$3,700 for a growth forecast of 6%. 

Other major economic indicators include the expansion of social investment by 12%, exports by 5%, inflation below 4% and a decline of 20% in the poverty rate under the city’s new standards.

“Hanoi stays firms in pursuing the dual target of containing the pandemic and boosting economic recovery,” Mr. Son stressed.

For the period 2021-25, Hanoi sets a GRDP growth target of 7.5-8%, in which the services sector would make up 65-65.5%, industry and services 22.5-23% and agro-forestry-fishery 1.4-1.6%.

By 2025, Hanoi is expected to complete the city’s industrialization and modernization process, with the GRDP per capita rising to US$8,300-8,500. The figure would be nearly double the nation’s GDP per capita that is projected to reach US$4,688 in the period 2021-25.