Vietnam's GDP is forecast to reach around 4.8% in 2021 and recover to a growth rate of 6.5-7% from 2022 onwards.

The report published by the World Bank on September 28 maintains the forecast one month ago for Vietnam's GDP growth in 2021. This calculation is based on the assumption that Vietnam would control the Covid-19 by the end of the third quarter for the economy to bounce back in the fourth quarter; the global economy maintains its recovery momentum, ensuring strong demand for Vietnamese exports in key markets such as the US, Europe, and China.

World Bank's forecast is more optimistic than ADB's when it is 1 percentage point higher. Currently, several domestic organizations also see that the Vietnamese economy has completely achieved the full-year growth target of 3.5-4% despite many difficulties, even if the third quarter GDP may be negative due to the negative impact of Covid-19.

In addition, the World Bank believes that the recovery process will also be supported by a large-scale vaccination campaign that will get 70% of the adult population vaccinated by mid-2022, helping to prevent new severe outbreaks. However, the organization noted, forecasts are dependent on risks including prolonged outbreaks, disruptions to economic activities.

The World Bank commented that, for the rest of 2021, monetary policy is expected to continue to loosen and allow businesses to extend the repayment period. Fiscal policy will be more supportive by accelerating the implementation of public investment projects, especially after the lifting of travel restrictions.

On the other hand, given the fiscal space available, the Government should continue to use resources to mitigate adverse social impacts and hedge against negative growth risks, especially if such risks increase. In the coming time, Vietnam needs to pursue green growth and digitalization to improve the resilience and sustainability of the economy.

In addition, Vietnam needs to increase the level of support and improve the implementation of monetary assistance programs to reach more households, informal sector workers, and those affected but not listed in the current social assistance databases. The second support package for households has now added affected groups of workers and the amount of support for individuals is also higher, but the frequency of monetary support is now limited to one-time support instead of multi-month support like April 2020.

Kylie Nguyen