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ADB projects Vietnam’s GDP growth at 6.7% this year
Thursday,  4/29/2021, 07:27 

ADB projects Vietnam’s GDP growth at 6.7% this year

The Saigon Times

A worker moves gas tanks for export at Tan Phong An Industrial Co., Ltd in Haiphong City. The Asian Development Bank has forecast Vietnam’s GDP growth at 6.7% in 2021 - PHOTO: VNA

HCMC - The Asian Development Bank (ADB) has forecast that Vietnam’s gross domestic product (GDP) growth would rebound to 6.7% in 2021 from 2.9% in 2020, or 0.7 percentage points higher than the target set by the National Assembly.

The bank today, April 28, issued the forecast, which is also higher than the 6.3% growth rate predicted by ADB country director for Vietnam Andrew Jeffries early this year, the local media reported.

Jeffries said Vietnam’s growth would be strong this year and the next, with the GDP being forecast to expand 7% in 2022.

According to Nguyen Minh Cuong, chief economist of ADB in Vietnam, the optimistic predictions were made thanks to Vietnam’s effective handling of Covid-19. The driving forces for the country’s economic growth this year will be industry, especially processing and manufacturing for export, public investment and trade.

Industry was forecast to grow 9.5% this year. The sector posted a strong growth of 6.3% in the first quarter of this year.

In addition, the Manufacturing Purchasing Managers' Index hit 53.6 in March, the highest since January 2019. A 50-point reading shows a neutral situation while a level higher than 50 indicates growth.

Foreign enterprises were expected to make investments in Vietnam thanks to Covid-19 control, facilitating meetings and cooperation between local firms and partners.

The recovery of Vietnam’s large trade partners will boost the demand for local exports.

Meanwhile, the service sector was projected to expand 6%. The sector’s growth will be based on digital transformation, higher spending on Covid-19 vaccines, improved business confidence and low interest rates.

In addition, the increase in investments will be a key motivation for this year and the next. The control over the pandemic and the issuance of the Law on Investment early this year will reduce obstacles and foster the foreign investment attraction.

The construction sector was also expected to grow fast as the Government had accelerated the progress of large infrastructure projects in 2021. Moreover, low interest rates will stimulate the development of real estate products.

Further, the Vietnamese economy will be supported by the recovery of the United States and China, Vietnam’s largest trade partners. As a result, the country’s exports may jump 8% in 2021 and 2022.

According to ADB, Vietnam’s inflation in the first three months of the year fell to the lowest level since 2016. However, the fuel prices and local consumption rose, resulting in a possible inflation of 3.8% this year and 4% in 2022.

Vietnam may have to face some risks, mainly the Covid-19 resurgence given the new variants and slow vaccination. Additionally, the rapid recovery of the domestic private sector may cause a high risk of asset bubbles if capital is not poured into production.

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