Vietnamese economy anticipated to enjoy high growth over next decade

VOV.VN - The Vietnamese economy looks set to grow by 6.5% annually over the next decade as the Government is making every effort to diversify its export markets whilst undertaking projects aimed at improving infrastructure, according to predictions made by Fitch Solutions.

The forecast made by the market research company is at the lower end of the Government’s 6.5% to 7% growth target for the 2021 to 2025 period.

Moving forward, it is likely that the country’s free trade agreements can help to expand external market access and therefore avoid overdependence on a single trading partner, according to Fitch Solutions.

The country also plans to prioritise the import of machinery and high-tech equipment, it said.

"A key difference in the economic strategy going forward is the Government’s aim to ascend the value chain and grow its high-tech industry."

However, this would require an increase in skill levels, which could only improve slowly over the coming decade,” it said.

"We expect the skills shortage to pose an impediment to the country’s ascension up the value chain."

In terms of future infrastructure development, the next five years will see the nation push forward with plans to complete the eastern cluster of the North-South Expressway and the first phase of the Long Thanh International Airport. In addition, over 1,700 kilometers of a coastal road from the northern province of Quang Ninh to the southern province of Ca Mau will also be developed.

Despite these targets, tardy permit approvals and the land acquisition process are likely to delay infrastructure projects.

The Government will also be targeting a budget deficit of 3.7% of GDP over the next five-year period.

"This implies that the Government intends to borrow more to fund expenditures over the coming years."

The Government will also aim to keep public debt at 47.5% of GDP, below the 65% limit, which Fitch Solutions believes to be an achievable target given the country’s strong economic growth potential.

This comes after Vietnamese GDP growth stood at just 2.9% last year due to the novel coronavirus (COVID-19), though it was one of the few economies in the world to achieve positive growth, higher than China at 2.3%, while the majority of other economies endured negative growth.

Furthermore, economists from Bank of America also anticipate that the Vietnamese economy will grow at 9.3% this year, higher than the forecast made by the World Bank.