At the start of 2020, the global economy dropped as the Covid-19 pandemic spread its wings. As with the rest of the world, key Vietnamese sectors, such as tourism and textile manufacture, crippled as well. The country was set out to grow 6.8% in GDP in 2020 after a growth of more than 7% the year before, but this estimate was then lowered to around 2.5-3%.
Even with this lowering of expectations, the Vietnamese economy is still considered exemplary when compared with the rest of the world. Thanks to its effective and especially early containment of the pandemic, the country was able to maintain a steady economic continuation for its local populace. As such, several sectors did not grind to a halt and were able to preserve their business. The World Bank forecasts a 2.8% annual growth for Vietnam in 2020, and when the pandemic measurements are maintained they predict 6.8% growth for 2021, returning to pre-crisis numbers and expectations.
With this feat, Vietnam has become one of only three countries in Asia to estimate growth over 2020, the other two being China and Myanmar. Other contributing factors to this growth include continued exports and a high trade surplus of over $20 BN USD in 2020. With some export sectors recording double-digit growth numbers such as electronics and computers (up 24% y-o-y) and machinery and equipment (up 45%).
Besides the rapid Covid-19 measurements, the economic prosperity is also the result of several trade agreements including the EU-Vietnam Free Trade Agreement (EVFTA) that took effect in August 2020, the Regional Comprehensive Economic Partnership (RCEP), and the Vietnam-UK Free Trade Agreement (UKVFTA). From this position, the Vietnamese economy is set out to benefit substantially through the trade and investment diversification that comes with it.
The level of commitment in the EVFTA is the highest Vietnam has ever reached among signed Free Trade Agreements so far as the EU is the second-largest export market of Vietnam. According to calculations by the Ministry of Planning and Investment, this Agreement will help raise Vietnam’s revenue from exports to the EU by about 20% by 2020; 42.7% by 2025, and 44.4% by 2030. The other way around is also set to increase as Vietnam’s imports from the EU are expected to grow 15.3% by 2020, 33.1% by 2025, and 36.7% by 2030.
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