Vietnam’s GDP growth forecast to reach 7% in 2021

AMRO said that after a sharp decrease in the second quarter, Vietnam’s economic growth started to rebound in the third quarter, driven by boosting public investment, helping the domestic economy recover and production capacity increase.

Amid rising uncertainty, AMRO stressed the need of maintaining policy support for Vietnam to strengthen its weak economic recovery and facilitate a transition to “new normal state” after the pandemic.

AMRO argues that an uneven and prolonged recovery in the global economy could harm the recovery of outside demand. Although domestic demand has increased after the COVID-19 pandemic was substantially controlled, skepticism remains about the risk of a recurrence of the pandemic.

The office also highlighted the necessity for greater fiscal support through both revenue and expenditure measures in order to support the nascent economic recovery if the growth momentum were to weaken, while targeted support to micro, small and medium enterprises and low-income households needs to continue and be regularly reviewed for its relevance and effectiveness.

Meanwhile, with the forecast for moderate inflation, Vietnam is recommended to continue supporting economic recovery, maintaining reasonable financial costs for households and businesses. With more suitable financial conditions, strengthening loan supervision in risk areas needs to be ensured to minimize the risk of asset bubbles./.