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Long-term vision on economic recovery

Manufacturing, the main driving force of the economy, has approached the double-digit growth rate as before the pandemic. (Illustrative image)

GDP growth in the first quarter of 2021 was estimated at 4.48%, not as high as expected, but demonstrating economic recovery in accordance with forecasts and the government’s scenario, contributing to maintaining and improving people’s sense of confidence.

All three sectors of the economy have seen good growth. The agricultural, forestry and fishery sectors continue to be a bright spot in the economy with a growth rate of 3.16%. Industry and construction also prospered, with growth of 6.3%, of which, manufacturing – the main driving force of the economy, approached double-digit growth rate as it was before the pandemic.

The service sector which was directly and most heavily affected by the pandemic also rose up with a growth rate of 3.34%. Average inflation returned to its lowest level forthe past 20 years.

Foreign investment attraction saw positive growth for the first time since the outbreak of the pandemic while the disbursement of public investment continued to increase. The monetary and credit market remained stable, something which had significantly supported the production and business activities of enterprises.

An indicator of great interest in the general economic picture is State budget revenue. Revenue from the production activities of all three business sectors increased over the same period last year, of which, revenue from the non-state economic sector soared by 22.4%.

Domestic revenue and revenue from import and export activities also reached a high level compared to estimatesand increased over the same period last year.

A good sign was that revenue from the business sector reached over 28% of the yearly estimate with the most levels in the non-state economic sector.

Although several localities are still being affected by the recurrence of the COVID-19 pandemic, production and business activities have essentially returned to normal, contributing positively to State budget revenue, showingthe increasing adaptation, resilience and recovery of the economy.

However, some important sectors of the economycontinue to face difficulties and have yet to recover.

This is the first time since 2016. That Vietnam hasrecorded a decrease in the number of newly established enterprises in the first quarter along with a decrease in the amount of registered capital while the number of enterprises suspending operation or being dissolved still remains at a high level.

The prosperity of Vietnam’s economy in the first quarter was mainly contributed to by the foreign direct investment (FDI) sector. FDI enterprises dominate the import and export activities of the country with the mainproducts being the processing and manufacturing industries.

Thus, economists recommend that, during the recovery of enterprises, attention should be paid to the recovery of domestic enterprises so that they will not be inferior to the FDI sector. Domestic enterprises also need to prepare a good foundation to stand ready to rise up strongly, instead of ending up in a state of disarray.

The impressive growth in 2020 and the first quarter of 2021 has shown Vietnam’s ability to control the crisis caused by the COVID-19 pandemic and to turn the crisis into an opportunity and successfully implement thecountry’s dual goals.

This is an important foundation for our country’s economy to recover after the pandemic, aiming to become a fully developed country.

Along with short-term policies being implemented to reduce the negative impact of the COVID-19 pandemic, domestic and foreign research organisations recommend that Vietnam should persevere with long-term reforms to drastically improve the macro foundation and reduce riskin the future.

Long-term solutions should be implemented with the highest levels of determination and a focus on renewing agrowth model based on technology and innovation; encouraging entrepreneurship; improving institutions towards respecting and protecting equality among all economic sectors; promoting the private sector; and others.