Vietnamese economy in recovery mode

Resolution 128 - The driving force for economic revival

 

Rarely has the nation’s economy had such a roller-coaster ride such as that in 2021. The quarterly GDP growth figures alone is enough of a confirmation. In the first quarter, GDP growth was 4.72%. By the second quarter, it went to 6.73%, the third quarter witnessed a huge decrease of 6.02% and the fourth quarter climbed back to  5.22%. For the whole year, the average figure was 2.58%.

The sad thing is that 2021 started off with high expectation. The National Assembly set a growth target of 6% for the year, but the government was determined to achieve 6.5%, hopeful of an economic recovery.

But such optimism was short-lived, as foreseen by many economic experts. Because the pandemic had “hit directly” on major economic centers and industrial zones. Bac Giang had to close industrial parks for a while, followed by those in Bac Ninh. The hardest hit were Ho Chi Minh City, Dong Nai and Binh Duong which are the industrial capitals of the country.

For a long time, social distancing measures were kept in place. Factories closed. The supply chain was broken. Laborers lost their jobs and left the big cities. Purchasing plummeted and production was paralyzed. What had to happen happened. The economy in the third quarter contracted by 6.02% (originally estimated at 6.17%).

The economy reversing was the concern of not only the government and policy makers, but also the people. One more day of social distancing, one more factory closed, meant one more day people’s livelihoods would be affected.

Facing such a harsh reality, and considering the speedy rate of the national vaccination campaign, the government decided to adjust its strategy and issued Resolution No. 128/NQ-CP on safe and flexible adaptation to the new normal of COVID-19. The resolution was considered a milestone marking the “revival” of the economy.

Ending the strongest measures of social distancing such as closing businesses and markets, the supply chain came alive again, production and business activities began returning to normal. Consumption and services began to recover. So did disbursement of public investment capital. As a result, the economic landscape changed. Growth picked up speed again. The economy in the fourth quarter rebounded at 5.22%, bringing GDP growth for the whole year to 2.58%.

Workers of Ha Tay Chemical Textile Company Limited strive to achieve an output of 1.8 million pairs of shoes and sandals by 2022 with a revenue of about 320 billion dong, giving jobs to 600 employees. Photo: Tran Viet/VNA

Although the economic growth in 2021 was the lowest in more than 3 decades of the innovation period in Vietnam, it holds meaning because of the efforts of the whole political system in a one-of-a-kind challenging year. There were also remarkable achievements, such as the record of import-exports reaching over 668 billion USD, the miracle of attracting foreign investment of over 31 billion USD and the excess of budget revenue compared to estimates.

More importantly, the economy was pushed into a recovery trajectory, gradually and flexibly adapting to the pandemic. During this global crisis though, joy also came hand in hand with concern and uncertainty.

“The economic chariot of 2022”: Marching toward light

2022 for sure will continue to be unpredictable. Many economic experts are of the same opinion, that entering 2022, Vietnam's economy will continue having advantages and opportunities intertwined with difficulties and challenges.

General Director of HSBC Vietnam Tim Evans, believed that in 2022, Vietnam's economy could regain the growth rate of 6.8% in 2020, with the main driving force coming from strong foreign direct investment. Meanwhile, Nguyen Thi Huong, General Director of the General Statistics Office, mentioned domestic demand, export, foreign direct investment and support policies from the government as favorable conditions.

The government has issued Resolutions No. 01 and 02 on macroeconomic management and on key solutions to improve the business environment and national competitiveness by 2022. On that basis, the government's theme for economic management in 2022 is "stability, discipline, safety, flexibility and efficiency". These are important keywords for economic recovery with the aim of 6% growth.

With that goal in mind, the government is developing the Socio-Economic Development and Recovery Program for the period 2022-2023, setting up a roadmap to bring the economy back to a high and sustainable growth trajectory. The social community, the business community and the whole political system are looking forward to a breakthrough from this program.

On the last day of 2021, the National Assembly Standing Committee had a meeting to discuss the fiscal and monetary policy for the Socio-Economic Development and Recovery Program period 2022-2023. The National Assembly is also holding an extra session to consider the approval of this program, which is regarded as a key factor for economic recovery. Delay in implementation could delay the chance of recovery.

The economic chariot in 2022 is operating under the Socio-Economic Development and Recovery Program. For the first time, the Vietnamese economy has a comprehensive and large-scale solution package. The new year 2022 - the beginning year of the economic recovery journey - has gone through the first three months slowly but steadily opening the economy.

• Story:  Phong Thu & Hong Hanh
• Photos: VNA  
• Designer:  Trang Nhung