The Vietnamese economy is forecast to grow seven percent per annum in 2021-22, largely driven by increased export and investment, Fitch Ratings said in a post on its website on Tuesday.
“Strong export growth and a successful campaign to contain the spread of COVID-19 have supported Vietnam’s economy through the pandemic,” the American credit rating agency remarked.
Other parts of Vietnam’s economy have proved robust despite tourism, one of the country’s main sectors, hit the hardest by the coronavirus crisis.
The government posted 2.9 percent in GDP growth last year, placing Vietnam among a handful of nations globally that reported positive economic growth amid the pandemic stress.
“Growth was buoyed by external demand, with goods exports rising by 6.9 percent,” Fitch Ratings stated.
“Domestic activity was also supported by the limited spread of COVID-19 in the country.
“Just 1,465 cases and 35 deaths from the virus were officially recorded in 2020.
“We expect growth to remain strong, at around seven percent annually, in 2021-2022, buoyed by continued export expansion and higher investment.”
The Southeast Asian country’s COVID-19 tally has reached 2,733, with 2,445 patients having recovered from the respiratory disease, as of Wednesday evening, according to the Ministry of Health’s data.
Growth prospects will be reinforced by a pandemic fiscal package for 2020-21 of about VND292 trillion (US$12.7 billion), or roughly 3.6 percent of the 2020 GDP, Fitch Ratings forecast.
Goods exports rose 23.8 percent year on year in the first quarter of this year, supporting real economic growth in the quarter of 4.5 percent year on year.
Vietnam is benefiting from such new trade agreements as the EU-Vietnam Free Trade Agreement and the Regional Comprehensive Economic Partnership, as well as the country’s cost competitiveness.
“Rapid increases in public infrastructure investment and FDI should bolster the sustainability of strong medium-term growth,” Fitch Ratings said.
Vietnam’s generally robust economic outlook remains subject to risks, as its vaccination program has moved slowly, beginning only on March 8, the company observed.
The nation has so far received 928,800 coronavirus vaccine doses from direct purchases or the COVAX scheme, co-led by the World Health Organization, according to the health ministry’s figures.
Over 60,000 people have been vaccinated against COVID-19 as of Wednesday evening.
“Vaccine hesitancy among the public appears low, which is a positive sign, but Vietnam’s confirmed vaccine orders cover a lower proportion of the population than in some neighboring states, such as Indonesia and Malaysia,” Fitch Ratings said.
“Should the country experience a major COVID-19 outbreak before vaccines are widely rolled out – prompting lockdowns – growth prospects and public finances could be affected.”