HA NOI, VIET NAM (15 September 2020) — Viet Nam’s economy is expected to grow 1.8% in 2020 amid the coronavirus disease (COVID-19) pandemic and bounce back to 6.3% in 2021, according to a new Asian Development Bank (ADB) report released today.
“Lower domestic consumption and weak global demand caused by COVID-19 have hurt Viet Nam’s economy more than expected. But economic growth will be resilient in 2020, in large part due to the government’s success in controlling the spread of COVID-19,” said ADB Country Director for Viet Nam Andrew Jeffries. “Economic growth will be supported by the country’s macroeconomic stability, increased public spending, and ongoing reforms to improve the business environment.”
The Asian Development Outlook (ADO) 2020 Update, ADB’s annual flagship economic publication, says Viet Nam’s economy will benefit from the continued diversion of production from the People’s Republic of China (PRC) to Viet Nam, recovery in the PRC economy, and the implementation of a free trade agreement with the European Union. Slower-than-normal growth would keep inflation subdued at 3.3% in 2020 and 3.5% in 2021.
Viet Nam’s economic outlook over the medium and long term remains positive. Viet Nam’s participation in a large number of bilateral and multilateral trade agreements will help the country’s economic rebound. Viet Nam will also likely benefit from the current shifting of supply chains to low-cost countries.
Significant risks remain. A prolonged global COVID-19 pandemic remains the biggest risk to Viet Nam’s growth outlook this year and next year. Another threat is global trade tensions, which lead to rising trade protection and financial risks that could be exacerbated by a prolonged pandemic, the report says.
ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region.