Vietnam’s prospects appear positive as the economy is projected to grow by about 6.8 per cent in 2021 and, thereafter, stabilise at around 6.5 per cent, according to the latest World Bank’s economic update for Vietnam “Taking Stock”.
This projection assumes that the COVID-19 crisis will be brought gradually under control, notably through the introduction of an effective vaccine.
The report emphasises that Vietnam might be exposed to fiscal, financial, and social risks that require greater attention from the authorities.
“Vietnam is standing at a crossroads of post-COVID-19 recovery. It has an opportunity to set itself on a greener, smarter, and more inclusive development path that will bolster resilience to future shocks from both pandemics and climate-related disasters,” said Carolyn Turk, World Bank Country Director for Việt Nam.
“The authorities must tackle the environmental and climate challenges with the same sense of urgency as they have done with COVID-19 because the costs of inaction are already visible and will become increasingly irreversible. The recent tropical storms in Vietnam’s central region and rising air pollution in the country’s major cities are good illustrations of this fragility.”
According to the WB Vietnam is expected to grow by almost 3 per cent in 2020 while the world economy is expected to contract at least by 4 per cent amidst the biggest global shock of recent decades.
The external sector – the main driver of economic growth in Vietnam over the past decade – has performed exceptionally well since the beginning of the COVID-19 crisis.
The country is on the verge of reporting not only its highest merchandise trade surplus ever but also an increase in international reserves. The continued inflows of foreign investment and the steady rise in merchandise exports more than compensated for the losses in foreign exchange earnings from decreased tourism activities and shrinking remittances, according to the report.
The report suggests that foreign investors have continued investing and/or shifting production activities to Vietnam due to the country’s good management of the pandemic.
According to the WB, two lessons from the successful management of the COVID-19 crisis could be extended to the environmental agenda.
The first lesson is that the best way to cope with an external shock is to be prepared in advance and move with early and bold actions. Second, beyond vision and capacity, the ability to embrace innovation and experiments is instrumental to change individual and collective behaviours, which lays at the root of strategies to cope with health and climate threats.
It argues that Vietnam’s ambition to become a high-economy will be determined not only by its capacity to exit successfully from the COVID-19 crisis but also how it will manage its natural resources and climate risks.