The International Monetary Fund (IMF) has revised upward its forecast for 2020 Vietnam GDP growth by 0.8 percentage points to 2.4 percent.
Vietnam’s growth would be among the highest in the world, thanks to its successful containment of the Covid-19 pandemic, Era Dabla Norris, mission chief to Vietnam and division chief in the IMF’s Asia and Pacific department, said at the end of her team’s virtual mission to Vietnam from October 15 to November 13.
In October, the IMF had forecast 1.6 percent growth.
Vietnam has benefited from prudent fiscal policies, largely geared toward supporting vulnerable households and firms, Norris said.
Monetary policy easing and financial relief provided by the State Bank of Vietnam (SBV) have alleviated liquidity pressures, lowered the cost of funding and facilitated the continued flow of credit, she said.
She expected a strong economic recovery in 2021, with GDP projected to grow by 6.5 percent and inflation contained at 4 percent.
She suggested that in the medium and long terms the emphasis should be on mobilizing revenues for green infrastructure projects, strengthening social protection systems and safeguarding debt sustainability.
“Monetary policy should remain supportive in the near term. Greater two-way exchange rate flexibility within the current framework would reduce the need to build reserve buffers and facilitate the adjustment to a potentially more challenging external environment.”
The IMF also believed that the SBV has struck an appropriate balance between supporting the recovery and banking system resilience.
Establishing an expedited SME-specific insolvency regime would help unlock capital and prevent unnecessary liquidations, while reducing labor skill mismatches and increasing human capital and technology access would boost labor productivity, it added.
Last year, GDP growth was 7.02 percent, the second highest growth figure in the last decade, after the record 7.08 percent in 2018.
Vietnam’s Remote Resources
We’re based in Ho Chi Minh City, Vietnam. So far Vietnam has weathered the storm well, thanks to prompt action by the government. Having had near misses from the earlier SARS and H5N1 pandemics, the government in Vietnam learned its lesson and was ready for the coronavirus when it came. With such extensive business and cultural links to China, and a long border, the government knew it was in danger if prompt action wasn’t taken. They followed a model similar to the more celebrated one adopted in South Korea. Fearing a mass outbreak, cases were thoroughly monitored and people were placed in quarantine. Unlike in South Korea, the government didn’t rely on mass test but on contact tracing, following the movements of confirmed patients and isolating those they had come into contact with. As a result, there have been, as of the end of November, just 1.316 confirmed cases, 1,153 recovered, 35 deaths. All businesses are working as normal since May.
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