Director of the Department of The National Accounts System under the General Statistics Office (GSO) Le Trung Hieu told The Hanoi Times of his expectation for the U-shaped recovery scenario of the Vietnamese economy, following a modest GDP growth in 2020-2021.

Director of the Department of The National Accounts System under the General Statistics Office (GSO) Le Trung Hieu.

Vietnam GDP growth in the third quarter of 2021 suffered a contraction of 6.17% and later rebounded to 5.22% in the subsequent one. From your view, is that a reflection of the economy going down to the bottom and on its way back?

Last year, the global economy was on a recovery trend as countries pushed for vaccination campaigns against the pandemic. The emergence of new variants, however, slowed down that process, while trading activities have not fully returned to normal due to the disruption of global supply chains.

On the domestic front, the fourth Covid-19 outbreak since last April caused severe impacts on socio-economic development. The situation forced the Government to adopt stricter anti-Covid-19 measures, including lockdown, to contain the pandemic.

Such an impact had resulted in a slowdown in economic growth in the third quarter of 2021. This, however, was not due to the economy itself, but from external factors and the unpredictable nature of the Covid-19 pandemic.

Coming to the fourth quarter, as the Government shifted the Covid-19 strategy from “zero Covid” to “living with the pandemic”, economic activities were allowed to resume, including those with a high risk of Covid infection such as transportation, or tourism.

Along with Government policies to ensure social welfare, the strong involvement of the entire political system and positive response helped the economy end the year on a high note at 2.58%, albeit at a slower rate compared to the previous year (2.91%).

This could be seen as a positive performance amid the pandemic with more devastating impacts against 2020.

What would be the prospects for Vietnam’s economy this year?

Assuming Vietnam could soon contain the pandemic and with the positive impacts from the upcoming socio-economic recovery program, Vietnam would have strong leverage for the economy to further expand in 2022 and subsequent years.

The pandemic for the past two years caused unprecedented hardship for the global economy, and the Vietnamese economy is no exception.

In 2020, Vietnam was among a handful of countries registering positive GDP growth of 2.91%. The global economy recovered better last year, but for Vietnam, the situation was worse due to the spread of the Delta variant.

As of the present, with a high vaccination rate and a flexible Covid-19 strategy, I expect the economy to rebound stronger in 2022 and in the coming years. The economy, therefore, after two years of modest growth, is on track of recovery and would go up in a U shape.

This year is a major turning point for Vietnam to realize the five-year socio-economic plan of 2021-2025.

The National Assembly set a GDP growth target of 6-6.5% for this year, which for me, is a challenging task due to the pandemic is still lingering around. The Omicron variant may further cause disruption to services and other parts of the economy as the country remains open.

From my point of view, Vietnam’s economy in 2022 would be based on the following driving forces:

Firstly, Vietnam’s economy remains in a positive position that is built upon a strong foundation from the 2011-2020 socio-economic development strategy, and the presence of a large foreign-invested sector; stable macro-economic fundamentals, which should serve as a platform for flexible management of monetary and fiscal policies.

Secondly, the manufacturing and agro-forestry-fishery sectors should be the pillars for the economy to recover. In 2022, the prospects of the manufacturing and processing sector would further improve, along with services sectors such as finance-banking, insurance, telecommunications, science-technologies, and healthcare, all that have thrived during the pandemic.

Thirdly, domestic consumption and social mobility would recover thanks to the high vaccination rate. The market is expected to receive strong support from the large number of people returning to work at industrial parks and economic hubs.

Fourthly, recent changes in the Investment Law are to have strong impacts on public investment by simplifying procedures and creating conditions for speedier disbursement of public funds.

Fifthly, amid the pandemic, many economic fields have adapted to the new situation by embarking on digitalization process, given the availability of technologies from the Industry 4.0

Sixthly, institutional reforms continue to be the priority of the Government for this year, which would be tremendously helpful for the business community, not to mention the presence of stimulus packages.

Seventhly, new-generation free trade agreements, such as the CPTPP, EVFTA, and RCEP would open up new opportunities for Vietnam’s export products to access new markets.

Eighthly, foreign direct investment (FDI) inflow is expected to further in 2022, along with booming tourist activities when international travel returns to normal. 

Thank you for your time!