Vietnam facing major challenges in economic growth

Vietnam’s economic growth is facing huge challenges in 2021 and it will take some time to recover, according to Associate Professor Dr. Pham The Anh, Head of the Macroeconomics faculty at the National Economics University (NEU).

GDP growth in the third quarter was down 6.17 per cent year-on-year, with services falling 9.28 per cent and industry and construction 5.02 per cent, while agriculture, forestry, and fishery increased a mere 1.04 per cent. Growth in the health sector and social assistance activities stood at 38.56 per cent.

The Vietnam Institute for Economic and Policy Research (VEPR) has issued two economic scenarios for 2021. In the worst-case scenario, the pandemic is likely to re-emerge and severely affect the economy, with many orders being taken away from Vietnam due to a failure to guarantee production schedules and the impact of labor shortages. Annual GDP growth will be only 1.0-1.5 per cent. In a best-case scenario, the country implements appropriate measures to adapt to the pandemic and ensures production and the circulation of goods, with annual GDP growth coming in at 2.0-2.5 per cent.

In terms of the economic outlook for the fourth quarter, Dr. Anh emphasized that the serious economic downturn in the third quarter and the associated damaging socio-economic consequences will take a long time to overcome. The loss of orders from FDI enterprises and the departure of workers from the city may become long-term problems if Vietnam does not make suitable changes.