Vietnam was Asia’s fastest growing economy in 2020, expanding 3%. This helped the economy benefit from an increase in global business activity and strong foreign investment (FDI), thereby boosting manufacturing industries and export.
The country’s economy is becoming increasingly digital with many Vietnamese using smart phones for digital transactions, but with around 60% of the population still unbanked, there is significant opportunity for greater adoption as the middle class grows.
The Vietnamese government is spending $119 billion on infrastructure in an effort to increase GDP through 2025.
According to a report by The Institute of Chartered Accountants of England and Wales (ICAEW) and Oxford Economics, Southeast Asia’s GDP will increase sharply to 4.8% in 2021 after falling 4.1% in 2020. This growth is thanks to an improvement in global business activities, moderated macroeconomics, continued support from the government budget, and low interest rates throughout the region.
Southeast Asian economies will continue to see varying rates of recovery in 2021, led by countries’ ability to contain the new wave of Covid-19 infections and their success in the purchase and distribution of vaccines.
Vietnam and Singapore are expected to continue to lead the economic recovery in the region. Although the return of Covid-19 cases in Vietnam is affecting manufacturing industries and exports, the economy is forecast to grow rapidly once restrictions are lifted.
Vietnam has sufficient conditions to achieve the twin targets of curbing the COVID-19 pandemic and securing economic growth in 2021, according to Andrew Jeffries, the Country Director of the Asian Development Bank (ADB).
In the first five months of 2021, the Vietnamese economy continued to post encouraging signs in export, foreign investment attraction, FDI disbursement, and retail sales.
However, unexpected Covid-19 outbreaks could continue to happen and impact part of the workforce, especially in industrial parks.
The only way to help push back the pandemic, ensure long-term safety for people, and create conditions for economic development is to step up COVID-19 vaccination, Andrew Jeffries added.