Vietnam set for modest growth in 2020
Vietnam’s GDP will grow by about 2-3% this year, down from an expansion of 7.02% in 2019, said Prime Minister Nguyen Xuan Phuc. He added, “We have done a good job in containing the virus, paving the way for reviving economic activities.”
Agreeing with the assessment, the World Bank expects a third quarter rebound to help Vietnam meet its GDP growth target. In its October country report, the bank reported that the pace of Vietnam’s recovery firmed up in September, with its industrial production index growing 4.8% year-on-year, compared to 2.1% in August.
At a time when most countries are struggling economically due to the COVID-19 pandemic, Vietnam, along with Myanmar, are the only two countries in ASEAN that are expected to register positive growth in 2020.
However, unemployment and slow credit growth remain notable concerns, said the World Bank. Labour force participation was at 74% in the third quarter, a drop of 2.4% year-on-year. Urban workers, the bank added, were most affected as they were more exposed to the mobility measures and restrictions.
Slow credit growth also continued in September at 10.2% year-on-year, compared to an average of 16.2% over the previous five years. This was caused by banks’ fear of high lending risks during the economic downturn, as well as lower demand from businesses despite the easing of monetary and lending conditions by the State Bank of Vietnam.