05 Oct Economic big picture looks good
Vietnam’s development over the past 30 years has been remarkable. Economic and political reforms launched in 1986 have spurred rapid economic growth. Between 2002 and 2018, GDP per capita increased 2.7 times, reaching over US$2,700 in 2019. In 2019, Vietnam’s economy continued to show fundamental strength and resilience, supported by robust domestic demand and export-oriented manufacturing. Gross domestic product (GDP) expanded 7.02% in 2019, fuelled by a robust expansion of the processing and manufacturing and services sectors. Due to the outbreak of the COVID-19, growth dropped but remained in positive territory in 2020 with 2.9%. According to the updated IMF forecasts from January 2021, GDP growth in Vietnam is expected to bounce back to 6.7% this year and 7.4% in 2022, subject to the post-pandemic global economic recovery.
On the infrastructure front too Vietnam scores well. Blessed with a long coastline, Vietnam has excellent potential for special economic zones, 13 of which are already established. There are plans to add 3 more, investing US$2.5B in each SEZ. In the first 11 months of 2020, foreign investors invested US$17 billion in Vietnam with a significant portion of these projects targeted at manufacturing, processing, real estate, and electricity production and distribution.As per the GSO, industrial activity in 2020 expanded by 3.3 percent.
The Asian Development Bank forecasts that Vietnam’s economy will grow the fastest in South East Asia despite the Covid19 pandemic. If this scenario holds true, the economy is forecast to rebound at a growth rate of 6.8% in 2021 and continue to grow strongly for a long period of time. This is reverberated by IMF estimates, which projects growth to be around 6.5 percent in 2021, thanks to strong economic fundamentals, decisive containment measures and well-targeted government support, according to the IMF’s latest annual assessment of the country’s economy.