Dr. Nguyen Quoc Viet: Viet Nam's economic will recover strongly when Covid-19 is fully controlled
Speaking with The World & Vietnam Report, Dr. Nguyen Quoc Viet, Vice Director of the Vietnam Institute for Economic and Policy Research (VEPR), University of Economics and Business, Vietnam National Unversity believes that, Viet Nam will witness economic growth as impressive as recorded in the 2018-2019 period (6.5-7%) once the Covid-19 pandemic is well under control.
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How do you assess Viet Nam's economy in the last months of 2021 and the prospect of economic recovery in 2022?
The 4th wave of the Covid-19 pandemic swept through Viet Nam in April 2021, leaving a number of problems for the economy. Specifically:
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| Dr. Nguyen Quoc Viet, Vice Director of the Vietnam Institute for Economic and Policy Research (VEPR), University of Economics and Business, Vietnam National Unversity. |
First, some sectors such as tourism, service, aviation, are still quite precarious. The index of consumer services and retail, although prospering, was still low compared to the same period in 2020 and significantly lower than 2019. This is a sign that domestic demand is still very low.
Second, there is the risk of inflation coming from rising input material prices and the risk of asset bubbles. Because of these two factors, economists and policymakers are talking about the possibility of stagflation in 2022.
Third, there’s an increasing trend in the number of enterprises withdrawing from the market.
However, the economy still has some bright spots. Industrial production index in November 2021 recovered strongly and exceeded the same period in 2020. Export is still going strong, with import-export turnover forecasted to reach 600 billion USD.
By the end of November 2021, international organizations and experts forecasted that Viet Nam's economic growth in 2021 is at 2.5-3%.
From 2015, Viet Nam’s economy has had great momentum, coming from reforms to improve competitiveness, business environment, and deeper integration with the region and the world. Therefore, I believe that when the Covid-19 pandemic is fully contained, the country will once again witness economic growth of 6.5-7% (that we had achieved in 2018-2019).
In the coming time, the manufacturing and assembly sector (electronics, phones, computers) will still play a leading role in the FDI sector and a focal point for exports. However, new impulses will come to other sectors such as services (resort tourism, ecotourism), produce, process, and export of agricultural and aquatic products.
In addition, the digital economy is expected to contribute directly and indirectly to growth, and at the same time, improve the competitiveness of other sectors.
What do you think are the challenges and opportunities that Viet Nam’s economy will have to face in 2022?
Regarding challenges, first, the Covid-19 pandemic has not been fully contained globally. Besides, the Omicron variant can also seriously affect Viet Nam’s businesses and growth, typically the FDI sector and export activities.
Second, challenges from transforming economic models post-Covid-19, such as digital transformation and sharing economy.
Third, challenges from rules of production and business, and global competitive pressure can pose difficulties for Viet Nam's export advantages. For example, at present, difficulties come from technical barriers and new import and export regulations from China - one of Viet Nam's largest export partners.
On the other hand, Covid-19 also brings a number of opportunities to the Vietnamese economy. For example, there are new opportunities from digital transformation (working remotely), national digital transformation and digital transformation in the service industry.
In addition, Viet Nam has the opportunity to shift production and supply chain, along with its efforts in integration. Production and consumer demand (both for goods and services) are also recovered.
In order to fully realize the advantages and to help people and businesses overcome the difficulties, and to restore production and business activities in the new context, what do you think about the State's supporting mechanism and policies in 2021 and in the future?
In my opinion, in 2021, the Government has ensured timely support packages, contributing to helping businesses remove difficulties in circulating and producing goods. Compared to 2020, support packages have been equal and more universal.
Most businesses still have not been able to recover from the Covid-19 pandemic, so they will need the Government's support packages in 2022.
