World Bank: Viet Nam’s economic conditions continue to improve

Regarding the COVID-19 pandemic situations in the country, the WB stated that the case fatality rate (CFR), which is the ratio between confirmed deaths and confirmed cases, fell from 2.5 percent in September to 2.0 percent in December. This fall is probably reflecting the effectiveness of the country’s rapid vaccination.

The WB highlighted Viet Nam’s positive signs in economic recovery as the industrial production index increased by 5.5 percent in November compared to the previous month. This solid recovery partly reflected the resumption of economic activities in the Southern provinces, including Ho Chi Minh City (up 13.3 percent).

Merchandise exports hit a record high of US$31.9 billion, helping maintain a second consecutive month of trade surplus while FDI commitment recovered after a brief dip in October.

Inflation ticked up due to fuel price hikes, recovering non-food domestic demand and rising logistic costs while credit growth remained stable, providing amble liquidity to support the economy recovery.

The policy of living with COVID will involve continued vigilance and fast action by the authorities, both in vaccination and in social distancing, testing, and quarantining, noted the WB.

WB specialists recommended that there is also clear need for fiscal policy support to boost private demand and help the domestic economy recover. Providing financial assistance to impacted workers and households would be an essential avenue to achieve this objective.

Given the available fiscal space, and difficulties registered in implementing the budget in 2021, another policy option for consideration is a reduction in the value-added taxes for 2022 to support private consumption. Continued close monitoring of the financial sector is also warranted, the WB suggested.

By Thuy Dung