Vietnam’s GDP growth is set for a strong rebound to 7.8% in 2021 from last year’s economic growth of 2.9%, according to Standard Chartered.

A garment factory at Dong Anh district. Photo: Chien Cong

Manufacturing could be the main driving force that helps Vietnam to become one of the fastest growing economies in Asia in 2021, stated the UK-based bank in a report.

Standard Chartered’s Economist Tim Leelahaphan suggested the country’s economy had been on the recovery path since the third quarter of last year, saying he expected the trend would continue in the coming time.

Meanwhile, high growth in services and public investment could serve as a boost for the economy, noted the bank.

According to the Standard Chartered, thanks to a series of effective measures against the Covid-19 pandemic, Vietnam has become more attractive in the eyes of investors as an ideal investment destination globally.

In the immediate future, Vietnam would continue to benefit from the US – China trade and technological tension, which is expected to linger under the Joe Biden’s administration. Under this context, the slow recovery of global demand and cautious sentiment from investors could weigh on the FDI inflows.

However, Standard Chartered stated the foreign capital inflow into Vietnam would remain positive in 2021.

Higher competitiveness is seen as a factor forcing Vietnamese firms enhance product quality and efficiency in their respective supply chains, as the country aims to become a hi-tech production hub.

However, this would require significant improvements in productivity, education, and technology transfer, added the bank.

Standard Chartered’s report also referred to the Regional Comprehensive Economic Partnership (RCEP) as an opportunity for small and medium firms in Vietnam to further integrate into global value chains.

Companies in China, South Korea and Japan could seek to cut production cost by moving part of their production chains to countries in ASEAN with lower labor costs, asserted the bank.

HSBC’s forecast for Vietnam growth this year is in line with that of HSBC at 7.6%, but higher than the Asian Development Bank (6.1%), and International Monetary Fund (6.5%).

Among local research centers, the Central Institute for Economic Management (CIEM) and the National Center for Socio-Economic Information and Forecast (NCIF) gave their respective predictions of 6.46% and 6.72%.

The government aims for an economic growth of 6.5% for 2021, 0.5 percentage points higher than the target set by the National Assembly.