Containers seen at Cat Lai Port in Ho Chi Minh City. Photo by Photo by Shutterstock/Hien Phung Thu.
Vietnam can see an annual growth of up to 6.8 percent in the 2021-2025 period if the global economy recovers from Covid-19 impacts.
In a best case scenario where the global economy recovers fast and the pandemic is contained, Vietnam’s should grow 6.72 percent this year, according to a report by the National Center for Socio-Economic Information and Forecast (NCIF).
Domestic manufacturing can return to pre-pandemic levels, public investment grows at 8 percent a year, and Vietnam will be able to take advantage of its free trade agreements, especially the EU-Vietnam Free Trade Agreement (EVFTA), the report says.
The center also expects a surge in foreign direct investment as multinationals diverse their supply chains to countries with lower manufacturing costs like Vietnam.
However, NCIF deputy director Dang Duc Anh also warned of possible risks in upcoming years. The global economy has become more unpredictable because of the pandemic, and rising protectionism and the transition to a digital economy requires due reforms and adjustments, he said.
One of the criteria needed to boost growth is a full transition to a market economy with a focus on developing the private sector, other experts have said.
Phan Duc Hieu, deputy head of the Central Institute for Economic Management (CIEM), said that the government should throw out a second support package that prioritizes strong businesses that have survived the pandemic, while those that are weak should withdraw as that is the nature of a market economy.
Economist Pham Chi Lan said development by region shold be prioritized. For instance, the Mekong Delta deserves special attention because agriculture development has been stagnant in this region for years, Lan said.
Vietnam’s growth fell to a decade-low of 2.9 percent last year, but the country was among very few in the world to record positive growth as the Covid-19 pandemic ravaged economies and pushed them into contraction.