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Oxford Economics: Vietnam would recover faster than other countries in the region

21/07/2020

According to Sian Fenner of Oxford Economics, good control of the COVID-19 pandemic will help Vietnam recover faster than most economies in the region.

In a report published on July 14, the lead Asia economist at Oxford Economics said that good control of the COVID-19 pandemic will help Vietnam recover faster than most economies in the region and can achieve growth rate of 2.3% in 2020.

The Oxford Economics report expects the Vietnamese economy to recover in the second half of the year, therefore, the annual growth may reach 2.3%, lower than 7.02% of 2019. By 2021, Vietnam's economy can achieve growth rate of 8%.

However, the recovery will also be easily affected by developments in the external environment, especially those affecting trade, tourism and foreign direct investment. Sian Fenner said: “Although quite promising, but we are still cautious about the prospects of growth drivers. In fact, part of the recent retail sector recovery reflects the relaxation of pent-up demand ” .

Foreign direct investment is expected to increase again in the second quarter of 2020 thanks to the potential of labor resources and proximity to China. Therefore, Vietnam is still an attractive destination for foreign investors, especially in the field of manufacturing.

However, current travel restrictions will continue to curb the growth of tourism. The Vietnamese government is trying to boost domestic tourism, but it is also unlikely to compensate for the decline in international tourism. In addition, since exports contribute up to 80% of Vietnam's GDP, Vietnam's economic recovery also depends on the recovery of global trade.

A major risk for Vietnam is the second wave of COVID-19 and countries in the world would apply blockade measures once again. In this scenario, Vietnam's growth in 2020 may reach only 1.5% and in 2021 would be at 7.8%.

 

Kylie Nguyen

© 2019 Vietnam Bank for Agriculture and Rural Development No. 2 Lang Ha street, Ba Dinh district, Hanoi, Vietnam
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