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Vietnam needs new drivers of growth to consolidate post-Covid-19 recovery While Vietnam’s economy has been seriously impacted by Covid-19, it remains resilient and is poised to bounce back, according to a new World Bank report.
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ccording to the latest Taking Stock report, titled “What will be the new normal for Vietnam? The economic impact of Covid-19”, released on 30 July 2020, although the Vietnamese economy suffered from Covid-19 in the first half of 2020, prospects remain positive for both the short and medium term. If the world situation gradually improves, economic activity should rebound in the second semester of 2020 so that the economy will grow at around 2.8 percent for the entire year, and by 6.8 percent in 2021. With less favorable external conditions, the economy will expand by only 1.5 percent in 2020 and 4.5 percent in 2021. The main challenge for Vietnam will be finding new drivers of growth to consolidate the expected recovery. The country’s traditional sources of growth–foreign demand and private consumption–are unlikely to return to their pre-crisis levels soon, amid continued uncertainties both at home and abroad. Covid-19 has also caused a surge in inequality as the pandemic affects businesses and people differently as, for example, workers in the service sector has seen a bigger decline in their income than farmers. “To adapt to the new normal, policymakers must find new ways to compensate for the weakening of the traditional drivers of growth while managing rising inequality,” said Stefanie Stallmeister, World Bank Acting Country Director for Vietnam.
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“However, by being ahead of the curve of the Covid-19 crisis, Vietnam has the unique opportunity to increase its footprint on the global economy and become a leader in tomorrow’s digital world.”
