Economic growth target still faces huge challenges

According to data provided by the General Statistics Office (GSO), the gross domestic product (GDP) during the second quarter of the year was estimated to have risen by 6.61% compared to the same period from last year. Generally, during the opening six months of the year, GDP surged by 5.64%, higher than the growth rate of 1.82% seen during the same period from last year. However, this is still lower than the growth rates of 7.05% and 6.77% seen during the corresponding periods in 2018 and 2019.

Dr. Can Van Luc, a local economist, said that this growth rate was lower than the early quarter forecast of 5.8% put forward by the Ministry of Planning and Investment, but in line with an earlier forecast of 5.6% for the first six months of the year.

However, the GDP growth target failed to meet the plan as set out by the Government's Resolution No. 01, with the expectation that GDP growth would surge by 5.12% in the first quarter and over 6% during the second quarter. However, growth results during the first half of the year remained very encouraging, despite coping with the impact of two COVID-19 waves, Dr. Luc said.

Whilst some forecasts were optimistic that GDP growth this year would reach 7%, Dr. Luc stated that the impact of the pandemic's resurgence must be taken into account more carefully in terms of growth forecasts.

The pandemic has had an adverse impact on at least nine different economic sectors, thereby making it extremely difficult to achieve this year’s growth rate of 6.5%,  Dr. Luc said. Indeed, economic growth is likely recover in the final months of the year, with GDP growth for the entire year likely to reach between 6.1% and 6.3%.

Sharing this view, Dr. Le Duy Binh, director of Economica Vietnam, said that the resurgence of the COVID-19 pandemic has served to slow economic growth which has partly recovered in the first quarter of the year. Most notably, the recurrence of the virus has had a direct impact on the country’s production capacity as it has directly affected a number of major industrial parks and major economic hubs.

Furthermore, the widespread nature of the pandemic has also impacted the speed of carrying out business ideas of private enterprises, foreign direct investment projects, public investment capital disbursement, and the recovery of the service sector.

“The fourth wave of COVID-19 has a huge impact on Vietnam's growth target in 2021. However, it is too early to confirm whether we will achieve the 2021 target or not as it also depends on the ability to control the disease and the effectiveness of disease control in the near future," Dr. Le Duy Binh noted.

As a means of fulfilling the set growth target of 6.5% for the entire year, economic growth in the second half of the year must reach over 7%. This represents a challenge amid complicated developments relating to COVID-19 pandemic and limited vaccine supply.

To achieve the growth rate as expected, Dr. Nguyen Tri Hieu, an economic expert, believed that the most important issue is to prioritise vaccination for workers and to prevent the disease from spreading to other businesses and industrial zones.

However, the number of vaccinated people in Vietnam currently remains low and poses a challenge to the successful implementation of the nation’s dual goals of ensuring pandemic prevention and control and socio-economic development,” Dr. Hieu  analysed.

Moving ahead to the end of the year, it is imperative to have at least 30% of the national population vaccinated, with between 70% and 80% of the population vaccinated by 2022 in order to achieve herd immunity. As such, the disease can be brought under control to stabilise production in the near future.

The Government, ministries, sectors, and localities must continue to properly implement long-term solutions to support businesses, reform institutions, improve the investment environment, promote fair competition, and reduce administrative procedures. This should be in order to create a favourable and safe business environment whilst encouraging innovation and creativity.

Greater attention should also be given to developing individual business households and gradually upgrading the informal economic sector, Dr. Hieu added.