Illustrative photo (Source: VNA) According to the article, the nation’s economic recoverystill faces headwinds due to a renewed upturn in daily new COVID-19 cases aswell as continuing supply chain disruptions.
As daily new COVID-19 cases started to decline during thesecond half of September and early October, easing lockdown restrictionsallowed the reopening of many factories, resulting in a sharp rebound in theIHS Markit Vietnam Manufacturing PMI to 52.1 in October.
During the third quarter, severe disruption to supply chainswere noted by firms in the PMI survey results. Companies linked longer leadtimes to difficulties with transportation both domestically and internationallydue to the pandemic, as well as raw material shortages. Manufacturers were alsofaced with surging input costs. Shortages of labour also contributed to risingbacklogs of work, as migrant workers returned to their home provinces and townsduring the protracted lockdowns and widespread factory closures.
It said the economic impact of the pandemic is expected torecede during 2022 as vaccination rollout becomes more widespread across thepopulation of Vietnam.
Over the medium-term outlook for the next five years, anumber of key drivers are expected to continue to make Vietnam one of thefastest growing emerging markets in the Asian region.
Firstly, Vietnam will continue to benefit from itsrelatively lower manufacturing wage costs. Secondly, Vietnam has a relativelylarge, well-educated labor force compared to many other regional competitors inSoutheast Asia, making it an attractive hub for manufacturing production bymultinationals. Third, rapid growth in capital expenditure is expected,reflecting continued strong foreign direct investment by foreign multinationalsas well as domestic infrastructure spending. Fourth, Vietnam is benefiting as apotential market for companies in the current wave of shifting productions toAsia. Fifth, many multinationals have been diversifying their manufacturingsupply chains during the past decade to reduce vulnerability to supplydisruptions and geopolitical events.
Vietnam is also set to benefit from its growing network offree trade agreements, including the ASEAN Free Trade Agreement (AFTA), the RegionalComprehensive Economic Partnership (RCEP), and the EU – Vietnam Free TradeAgreement (EVFTA).
Despite these near-term risks, over the medium-term economicoutlook, a large number of positive growth drivers are creating favorabletailwinds and will continue to underpin the rapid growth of Vietnam's economy.This is expected to drive strong growth in Vietnam's total GDP as well as percapita GDP.
Vietnam's total GDP is forecast to increase from 270 billionUSD in 2020 to USD 433 billion USD by 2025, rising to USD 687 billion by 2030.This translates to very rapid growth in Vietnam's per capita GDP, from 2,785 USDper year in 2020 to 4,280 USD per year by 2025 and 6,600 USD by 2030, resultingin substantial expansion in the size of Vietnam's domestic consumer market./.
VNA
