Experts say the impact of Covid-19 on Vietnam’s economy might not be heavy if the disease is contained soon.

Optimistic forecast

In its annual publication Asian Development Outlook, the Asian Development Bank said Vietnam’s economy is facing a number of challenges due to the pandemic but it will remain resilient. The Bank forecasts that if Covid-19 is contained in the first half of this year, Vietnam’s economy will grow 6.8% next year, not much different from its forecast before the pandemic. In the medium and long term, Vietnam’s economy should maintain its strong momentum, according to the ADB. ADB Country Director for Vietnam Eric Sidgwick said that although economic activities are slowing and health risks continue, Vietnam has remained one of the countries with the fastest economic growth in Southeast Asia.

Credit ratings agency Fitch forecast that Vietnam’s economy will rebound in 2021 with growth estimated at more than 7% as domestic and foreign demand, exports, tourism, and FDI gradually recover.

Fitch’s maintenance of Vietnam’s rating at BB is a bright spot in the country’s credit profile, says economist Nguyen Minh Phong: "Fitch’s credit rating shows that Vietnam’s international prestige based on its sound growth last year continues. Vietnam recorded achievements in maintaining a balanced budget and forex reserves, restructuring banking, ensuring macroeconomic stability, and improving the domestic financial system. We also have strong prospects for attracting more foreign investment and boosting domestic economic growth. There are reasons to hope that when the pandemic is over, Vietnam’s currently contracted economic strength and potential will expand like a spring and achieve the 7% plus economic growth that Fitch forecasts."

Momentum for growth recovery

The ADB says momentum for economic growth is provided by the growth of Vietnam’s middle class, the dynamism of its private sector, and its improved business environment, but more incentives are needed. According to the ADB, a legal framework for fostering fintech would help Vietnam develop wider and deeper financial services. Jacques Morisset, Senior Economist of the World Bank in Vietnam, said Vietnam has adopted policies to protect people from the Covid-19 crisis, support businesses, and effectively manage the budget.

Vietnamese economists ascribe the country’s strong prospect of economic growth to prompt action by the government and coordinated efforts by regulators, localities, and enterprises. They say there are many opportunities for Vietnam to tap its potential.

Mac Quoc Anh, Vice Chairman and Secretary General of the Hanoi Association of SMEs, said: "Businesses in Hanoi and elsewhere are taking advantage of policies. Enterprises are shifting from the traditional business model to digital business. They are making full use of capital resources, financial incentives, tax reductions and exemptions, and fee waivers to invest heavily in their areas of strength."

The improved business environment and the increasing number of bilateral and multilateral trade agreements that Vietnam has signed will create prospects for the country to expand its markets, a key to its post-pandemic economy recovery.

At an online conference between the government and localities last week, Prime Minister Nguyen Xuan Phuc said that throughout its history, Vietnam has never surrendered, but has always stood united and determined against any challenge.