With the impacts of Covid-19, Vietnam’s growth in the first three months of 2020 was just 3.82%, the slowest pace since 2011. The World Bank predicted that Vietnam’s full-year growth will be 4.9% while the Ministry of Planning and Investment’s forecast is 5%.
But, as the whole world is still gripped by the Covid-19 epidemic, such a figure is quite decent, and the important thing is that Vietnam is making every effort to maintain its economic growth momentum. The highlight of the economic picture in the first quarter was 0.5% growth in exports while a trade surplus was still maintained.
The room for growth in the remaining months continues to focus on monetary and fiscal policy. But opportunity also lies in other important solutions as the pandemic is expected to persist, with no end in sight.
According to the General Statistics Office, if Vietnam wants to achieve growth of over 5% in 2020, it needs to step up institutional reform, address bottlenecks in administrative procedures, and speed up public investment disbursement, especially for major projects with great impact to other parts of the economy.
At the same time, it is necessary to enhance investment efficiency, as measured by the incremental capital-output ratio (ICOR), which has been falling over the years but still needs further improvement.
In addition, enhancing productivity is the most important driver of growth because if productivity increases by 1% then GDP will rise by 0.94%. The reality requires a policy to replace imported goods with Vietnamese-made goods and enhance the effectiveness of retail network, especially in remote areas. Attention should also be given to developing the domestic market with nearly 100 million people in order to adapt to a new supply-demand situation shaped by the pandemic.
With a wide range of measures being taken to keep the economic growth momentum going, Vietnam will have a chance to recover after the Covid-19 outbreak is over.
