ADB forecasts that the Vietnamese economy will bounce back if the COVID-19 pandemic is brought under control by the end of 2021 and 70% of the country’s population are vaccinated by the second quarter of 2022. (Illustrative image)

ABD has lowered its economic growth forecast for Vietnam in 2021 to 3.8%, from a previous estimate of 6.7%, due to a resurgence of the COVID-19 pandemic that has tightened the labour market, lowered industrial output, and disrupted agricultural value chains.

ADB also forecast Vietnam’s economic growth at 6.5% in 2022 while inflation will be muted in 2021 and 2022 due to the slower growth.

“The prolonged COVID-19 pandemic and extended lockdowns have weakened consumption and investment, hampering Vietnam’s growth prospects," said ADB’s Country Director for Vietnam Andrew Jeffries.

“But the Vietnamese economy will bounce back if the COVID-19 pandemic is brought under control by the end of 2021 and 70% of the country’s population are vaccinated by the second quarter of 2022,” he noted.

ADB remains bullish on Vietnam’s prospects in the medium and long term because growth could be supported by a revival of domestic demand, accelerated disbursement of public investment, and an expansion to new export markets thanks to a number of free trade agreements and the expected global economic recovery.

However, ADB stated that Vietnam’s near-term outlook remains challenging mainly due to the risk of a prolonged pandemic.

Vietnam can benefit from removing administrative hurdles to businesses and people and accelerating digital transformation, which would help improve the efficiency of pandemic control measures and support a sustainable economic recovery this year and next, according to ADB.