Vietnam’s effective management of COVID-19 has boosted confidence and facilitated the easing of restrictions and economic recovery, according to an article published by the Australia – Vietnam Policy Institute (AVPI).
This effective management, combined with continued progress in laying the foundations for sustained medium-term growth, provide sound reasons to be optimistic about economic prospects for 2022 and beyond.
“Although the pandemic imposed considerable hardships on many households, workers and businesses, Vietnamese private businesses have demonstrated resilience with a continuing appetite to invest in expansion,” said the article, written by Raymond Mallon, an economist and a visiting fellow at AVPI.
Growth in business numbers has accelerated again over the last six months and increased private investment is becoming increasingly pivotal in generating new employment opportunities, it noted.
Aiming to ameliorate the economic impact of the pandemic, the Vietnamese government has renewed efforts to reduce institutional and infrastructure bottlenecks and ensuring that all businesses compete on a level playing field.
The government has committed to increasing expenditure on health, education, and infrastructure, and to sustain limited business support. As the government re-focuses its attention on non-COVID socio-economic development issues, a recovery in flows of public investment is expected in 2022.
Additionally, Vietnam’s domestic middle class continues to expand, contributing to accelerated growth in domestic consumer demand. Vietnamese enterprises are increasingly integrating into global production chains, boosting investment, technology transfer, productivity growth and incomes. Recently implemented regional economic cooperation agreements are also helping to further deepen regional supply chain links, boosting trade and foreign investment, and providing new opportunities for businesses in Vietnam.
The article recommends to strengthen education and health outcomes; facilitate the movement of workers out of declining industries; strengthen social safety nets (especially for informal workers); further improving the business environment; addressing infrastructure bottlenecks; and accelerating public investment and improving investment efficiency.
There is also a need for a renewed focus on building market institutions to provide an effective and predictable policy and regulatory environment. Vietnamese policy makers also need to continue to monitor and provide appropriate support to those in Vietnam most adversely impacted by the pandemic, climate change/disaster impacts, and ongoing economic restructuring.