The Asian Development Bank (ADB) has revised its forecast for Vietnam’s economic growth this year to 2.3 percent, compared to its earlier forecast of 1.8 percent in September.
Vietnam’s growth accelerated from 0.4 per cent in the second quarter of 2020 to 2.6 per cent in the third quarter, lifting average growth for January-September to 2.1 per cent. The change in the growth forecast from 1.8 to 2.3 per cent was prompted by accelerated public investment, revived domestic consumption, trade expansion, and rapid recovery in China. The growth forecast for 2021 was slightly revised down to 6.1 per cent, according to a report released by the ADB today.
The inflation forecast for Vietnam was revised up to 3.5 per cent as floods in Central Vietnam may put pressure on food prices.
Economic growth in Southeast Asia remained under pressure as COVID-19 outbreaks and containment measures continue, particularly in Indonesia, Malaysia, and the Philippines. The subregion’s growth forecast for 2020 is revised down to -4.4 from -3.8 per cent in September. The subregion’s outlook for 2021 is also downgraded, with Southeast Asia now expected to grow 5.2 per cent next year, compared to the 5.5 per cent growth forecast in September.
In general, economic activity in developing Asia is forecast to contract by 0.4 per cent this year, before picking up to 6.8 per cent in 2021 as the region moves toward recovery from the effects of the coronavirus disease (COVID-19) pandemic, says the report.
The new growth forecast is an improvement from the -0.7 per cent forecast in September, while the outlook for 2021 remains unchanged. But prospects are diverging within the region, with East Asia set to grow this year while other subregions are contracting.
“The outlook for developing Asia is showing improvement. Growth projections have been upgraded for China and India, the region’s two largest economies,” said ADB chief economist Yasuyuki Sawada. “A prolonged pandemic remains the primary risk but recent developments on the vaccine front are tempering this. Safe, effective, and timely vaccine delivery in developing economies will be critical to support the reopening of economies and the recovery of growth in the region.”
Pandemic-induced lockdowns and restrictions have been eased in varying levels in the region, with merchandise exports rebounding quickly from substantial declines in the second quarter. Mobility is also returning to pre-COVID-19 levels in East Asia and the Pacific, where the spread of COVID-19 has largely been contained or prevented in recent months. A recovery in tourism, however, is likely to be delayed, according to the VIR.￼