Ready to take advantage, Vietnam's economy needs to seize the opportunity to 'overcome' Covid-19

Exports will be one of the drivers of Vietnam's economic growth at the end of 2020. (Source: asiafundmanagers)

Where does the growth drive come from?

With a 9-month trade surplus of nearly 17 billion USD, economic experts believe that exports will be one of the drivers of economic growth at the end of this year.

Along with that, after more than 2 months of the Free Trade Agreement between the European Union (EU) and Vietnam (EVFTA) taking effect, there have been nearly 15,000 sets of Certificates of Origin (C/O) form EUR.1 with a turnover of nearly 700 million USD to EU countries that have been granted. The items granted this model mainly include: footwear, seafood, plastics and plastic products, coffee, textiles, bags, suitcases, vegetables, rattan products, etc bamboo, knitting, agricultural products, electronic goods...

In August 2020 alone, when the EVFTA Agreement was implemented, Vietnam's export turnover to the EU market reached 3.25 billion USD, up 4.65% compared to July 2020. By September, export turnover to this market increased sharply to 14.4% over the same period in 2019.

According to the Ministry of Industry and Trade, in addition to the EU market, in the first 9 months of 2020, the United States was Vietnam's largest export market with a turnover of 54.73 billion USD, up 22.6% over the same period in 2019. Next are China, ASEAN, South Korea, Japan...

Generally, in the first 9 months of this year, the country's export turnover reached 202.4 billion USD, up 4% over the same period in 2019. The highlight is that the domestic economic sector continues to create a driving force for export growth with a turnover of 71.4 billion USD, up 19.5% over the same period in 2019.

According to the BIDV Institute of Training and Research, exports in the first 9 months of 2020 increased compared to the same period last year thanks to the positive recovery of international demand and the positive effects of the EVFTA Agreement. Notably, many key export products have increased again such as: wood increased by 12.4%, rice increased by 12%, means of transport and spare parts increased by 2.8%.

Director General of the General Statistics Office (Ministry of Planning and Investment) Nguyen Thi Huong said that among the industries and fields that have contributed to growth in the first 9 months of the year, the processing industry, manufacturing, with an increase of 4.6% over the same period in 2019. In addition, the wholesale and retail industry also contributed positively to growth with an increase of 4.98% over the same period in 2019.

Experts believe that the retail market after the Covid-19 epidemic is controlled will have many changes; at the same time, the holidays and Tet are approaching, so it is forecasted that the demand for goods will increase. Moreover, e-commerce will not take away the market share of the traditional retail system but is a plus point for retailers who know how to seize the opportunity.

One area that also made a major contribution to growth in the first 9 months of 2020 was agriculture. Despite the dual impact due to export output difficulties and severe natural disasters, the agricultural sector has had a positive recovery, contributing 13.62% to the overall growth rate, higher than the contribution of 4% of the same period in 2019.

According to the BIDV Institute of Training and Research, although in 9 months the agricultural sector increased by 1.84%, lower than the increase of 2.02% in the same period in 2019, but improved compared to the increase of 1.19% in the first 6 months of the year thanks to timely response measures to natural disasterswell epidemic.

Disbursement of investment capital is also one of the drivers of GDP growth in 2020 and the following years because the first 9 months of 2020 reached VND 303,000 billion, equal to nearly 60% of the year plan and increased by 33% over the same period in 2019. This is the highest growth rate in the past 5 years, creating support and spillover for many economic sectors that are already affected by the epidemic.

Along with that, the finance and banking industries also tend to recover, creating an important premise for the fourth quarter of 2020 and the whole year of 2020.

Seizing opportunities, overcoming the Covid-19 crisis

In the context of the complicated world situation and the impact of the Covid-19 epidemic, at the regular Government session in September, Prime Minister Nguyen Xuan Phuc emphasized the spirit of "self-reliance, self-reliance is stronger in the development of the country".

"Vietnam's economy has passed the bottom in the second quarter of 2020 and is recovering in a V-shape. Along with that, growth in the third quarter of 2.62% is the basis for judging that we can grow positively in 2020", Prime Minister Nguyen Xuan Phuc emphasized.

In fact, the successes in implementing the "dual goals" of both epidemic prevention and control and economic recovery and development of Vietnam have been recognized by many countries around the world.

Many international organizations such as the Asian Development Bank (ADB), the World Bank (WB) and recently S&P Global Ratings have made positive forecasts with the following statements: Vietnam is one of the economies with the best growth recovery rate in Southeast Asia and the only economy that can grow positively this year. In 2021, ADB forecasts Vietnam to grow by 8.1%, S&P forecasts Vietnam to grow by 11.2%.

With the spirit of self-reliance, self-reliance and seizing the opportunity for the world economy to recover after the epidemic, the Government aims to strive for economic growth in 2020 to reach 2.5 to 3%, expected to reach 6.7% in 2021.

In order to achieve the immediate goals in the last quarter of the year and 2021, according to the BIDV Institute of Training and Research, the main drivers for Vietnam's growth are in the direction of focusing mainly on the agricultural sector; At the same time, the processing and manufacturing industry in the industries of electronic equipment, computers, mobile phones, automobile manufacturing and assembly will still be the driving force for the growth of the industrial sector in particular and growth in general. The production and export of agricultural products and electronic equipment, telephones and computers can compensate for difficulties for industries that are Vietnam's strengths such as textiles, garments, leather and footwear due to the decline in both supply and demand from international partners.

According to Ms. Pho Thi Kim Chi, Deputy Head of the Macroeconomic Forecasting Department, National Center for Socio-Economic Information and Forecasting (Ministry of Planning and Investment) forecasts that in 2021, with a fairly stable macro foundation and is highly appreciated in controlling and dealing with the epidemic, Vietnam is having an advantage in attracting the attention of international investors and businesses. This is an important factor, especially in the context of competition and trade conflicts that can accelerate the process of shifting capital to potential markets.

Participating in and implementing new-generation FTAs such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and EVFTA is also a condition for Vietnam to expand its market. attracting investment, technology and improving the business environment, thereby promoting economic growth in 2021 and the following years.

Commenting on the global supply chain shift trend, Mr. Shimizu Akira, Chief Representative of JICA Vietnam Office, said that this trend brings Vietnam new opportunities. However, Vietnam needs to improve the quality of human resources; develop high-quality infrastructure to attract foreign investment.

(according to VNA)