Vietnam real GDP growth slows to 2.58% in 2021 as pandemic drags

HANOI — Growth in Vietnam’s real gross domestic product slowed to 2.58% in 2021, government data showed on Wednesday, dropping from 2.91% the year before as the coronavirus pandemic casts a long shadow over one of Southeast Asia’s key economies.

The numbers from the General Statistics Office of Vietnam confirm the country has fallen well short of its 6.5% growth target for the year, with consumer spending declining sharply amid prolonged COVID-19 curbs on movement even as exports remained solid.

The nation’s real GDP for the three months through December rose 5.22% from the same period a year ago. That marks a recovery from the previous quarter, when the economy shrank 6.02% year-on-year.

Authorities have been gradually easing coronavirus restrictions since October in a bid to boost the economy, but daily infection rates are now above 15,000 and among the highest in Asia.

Government officials on Tuesday confirmed Vietnam’s first case of the omicron variant of the coronavirus.

Worries over omicron have been swirling globally, with authorities in Vietnam growing increasingly wary. In the capital, Hanoi, areas where restaurants are banned from operating have been expanded.

The country’s retail sales, including service sales, decreased 2.8% year-on-year in the three months to December. That’s a smaller decline than the record 33.7% drop in August, but pandemic restrictions on shops and people’s movements are still biting hard.

Vietnam was largely successful in containing new coronavirus infections until last spring, when the delta variant started to spread. Authorities then introduced so-called factory quarantine in Ho Chi Minh City and other southern areas, with workers required to remain inside factories.

The International Monetary Fund estimates Vietnam’s GDP will increase 6.6% in 2022, with global companies apparently yet to lose their appetite for investing in the country. For example, international toymaker Lego Group plans to spend over $1 billion to build a factory in southern Vietnam.

However, if the pandemic continues to expand, Vietnam will be forced to introduce stricter countermeasures than its neighbors due to its weak medical system.

Vietnam’s growth hit 7% for the second straight year in 2019, with factories relocating from China as the Sino-U.S. trade war intensified. Its government must now try to strike a balance between fighting the pandemic and battling to get its economy back on track.

By: asia.nikkei.com