Vietnam’s economy has been resilient against the COVID-19 pandemic. GDP growth is expected to rebound strongly in 2021, reflecting the country’s relatively successful containment of the pandemic as well as strong external demand.
Key external and domestic risks stem mainly from the uncertainty over the impact of the pandemic and its evolution. A protracted and uneven recovery of the global economy may jeopardize the recovery in external demand while domestic demand remains susceptible to the risk of further waves of infection. Risks in the financial sector may arise from the impact of COVID-19 pandemic measures on asset quality.
Given the uncertain growth prospects, greater fiscal support may be warranted to support the nascent economic recovery. Targeted support to low-income households and micro, small, and medium-sized enterprises should continue and be regularly reviewed for their relevance and effectiveness. Structural reforms should be accelerated to bolster economic recovery and to ensure a sustainable development path.
The report also takes a deep-dive in two key issues pertaining to the country’s economic development: (i) Evolution of Vietnam’s exports and global value chain participation, and (ii) Vietnam’s strong FDI as a driver of economic growth.