2020 is considered a year of great difficulties and challenges for the world economy in general, including Vietnam. The world economy is in serious recession, the growth of major economies has declined deeply due to the negative influence of the Covid-19 epidemic. However, Vietnam’s economy still maintained growth with an estimated GDP growth rate of 2.91%.
In 2021, Vietnam is forecasted to have 6% GDP growth in 2021, inflation will continue to be tightly controlled, credit growth in 2021 will be about 12%, … to bring the economy to a post-pandemic recovery. strong growth.

Overview of Vietnam’s economic growth in 2020

Source: VIRAC, GSO

Vietnam’s gross domestic product (GDP) in 2020 is estimated to increase 2.91% (Q1 increased 3.68%; Q2 increased 0.39%; Q3 increased 2.69%; Q4 increased 4.48%) compared to 2019. Although it is the lowest growth rate of the years in the 2011-2020 period, in the context of complicated developments in Covid-19, it is a great success for Vietnam with the highest growth rate in 2020 in the world. According to the World Economic Outlook Report published in November 2020, the International Monetary Fund (IMF), in 2020, Vietnam’s economy is one of the four economies in the world that have average  GDP growth highest (Vietnam, Taiwan, Egypt and China). 

Among the 4 quarters’ overall growth, Q2 had the smallest increase. Because it was the time when the Covid-19 epidemic in Vietnam broke out most strongly, measures of social gap and economic closure made the growth of the month, April, May and June slow. After the disease was controlled, the Government implemented many policies to stimulate the economy to develop again, which is reflected in the growth rates of Q3 and Q4 of 2.69% and 4.48%, respectively.

Source: VIRAC, GSO

Economic structure in 2020 has many changes, the service sector accounts for the largest share in the country’s GDP with 41.63%. Covid-19 has complicated developments, seriously affecting trade and service activities. The service sector in 2020 reached the lowest growth rate of the years 2011-2020. The second is the industry with the proportion of 33.72%, an increase of 3.36%, contributing 1.12 percentage points to the growth rate of the total added value of the whole economy. In which, the processing and manufacturing industry plays a key role in driving the economic growth with an increase of 5.82%. Agriculture, forestry and fisheries accounted for 14.85%, increased 2.55%, contributed 0.29 percentage points to the overall growth.


Vietnam’s production and consumption in 2020 has many bright spots before the complicated development of Covid – 19.

Source: VIRAC, GSO

The production of agriculture, forestry and fishery in 2020 will face many difficulties due to the impact of drought and saltwater intrusion; African Swine Fever; The Covid-19 epidemic was complicated, affecting the production and export and import of agricultural products. Facing these difficulties, the agricultural sector has had timely and effective response solutions, so the production results are quite good. The agriculture, forestry and fishery sector has played a supporting role in the economy in difficult times, ensuring the supply of food, essential goods: 

The agricultural sector reached VND 384,117 billion (at constant 2010 prices), an increase of 2.55% compared to 2019, accounting for 73.3% of the total production value. By the end of 2020, the cultivated area of winter rice in the whole country reaches 1,584.6 thousand hectares, equaling 98.3% of the same period last year. Production of crops and a number of annual crops: Corn output reached 4.59 million tons, a decrease of 140.3 thousand tons compared to 2019 due to a decrease of 43 thousand hectares of cultivated area; sweet potato reached 1.37 million tons, down 57.5 thousand tons (the area decreased by 7.8 thousand hectares); sugarcane reached 11.88 million tons, decreased 3.44 million tons (reduced area 45.3 thousand hectares);…

By 2020, the newly concentrated planted forest area of the whole country is estimated at 260.5 thousand hectares, down 3.2% from the previous year; the number of scattered planted trees reached 94.6 million, down 1.6%; exploited wood output reached 16.9 million m3, up 3.7%; firewood exploited output reached 18.9 million steres, down 1%. Damaged forest area was 1,464.3 ha, down 45.6% against the previous year, of which burnt forest area was 645.3 ha, down 67.8%; deforested forest area was 819 ha, an increase of 19.4%.

The fisheries sector continued to achieve a stable growth with 3.08% equivalent to VND 115,291 billion. Generally, in 2020, the total output of aquatic products is estimated to reach 8,423.1 thousand tons, up 1.8% over the same period last year, of which aquaculture production reaches 4,559.2 thousand tons, up 1.5%; fishing output reached 3,863.9 thousand tons, up 2.3%.

Source: VIRAC, GSO

In 2020, Covid-19 had complicated developments in the world, but Vietnam had good disease control, so the trade and consumer service activities still reached a high rate in the last months of the year. For the whole year 2020, the total retail sales of consumer goods and services will reach VND 5,059.8 trillion, an increase of 2.6% over the previous year, if excluding the price factor, it will decrease by 1.2% (up by 9.5% in 2019).

Estimated retail sales of goods in 2020 is VND 3,996.9 trillion, accounting for 79% of the total and increasing 6.8% compared to the previous year. Revenue from accommodation services, catering services reached 510.4 trillion VND, accounting for 10.1% and decreased 13%. Travel and tourism had revenue of 17.9 trillion dong, accounting for 0.3% and down 59.5%. Finally, revenue from other services reached 534.6 trillion VND, accounting for 10.6% and decreasing by 4%.

Investment plummeted due to the gloomy economic market.

Source: VIRAC, GSO

Social investment capital at current prices in 2020 is equal to 34.4% of GDP, estimated at 2,164.5 trillion VND, which is the lowest level in the 2011-2020 period due to the negative impact of Covid-19 epidemic on all production and business activities. 

State sector capital reached 729 trillion VND, accounting for 33.7% of the total capital and increased 14.5% of the growth rate of capital realized from the State budget, the highest in the period 2011-2020. Non-state sector reached 972.2 trillion VND, equaling 44.9% and increasing by 3.1%. Foreign direct investment sector reached 463.3 trillion VND, equaling 21.4% and decreasing 1.3%.

Source: VIRAC, GSO

As of December 20, 2020, the total newly registered, adjusted and contributed capital and purchased shares of foreign investors reached 28.53 billion USD, equaling 75% as compared to the same period in 2019. In which, the newly registered capital had 2,523 new projects granted investment certificates (down 35% over the same period), the total registered capital reached 14.65 billion USD (down 12.5% compared to the same period in 2019). The adjusted capital has 1,140 times of projects registered to adjust investment capital (down 17.5% over the same period), the total additional registered capital reached over 6.4 billion USD (up 10.6% over the same period). Capital contribution and share purchase were 6,141 times of capital contribution and share purchase by foreign investors (down 37.6% over the same period), the total value of the capital contribution 7.47 billion USD (down 51.7% over the same period). The structure of the value of capital contribution and share purchase in the total investment capital also decreased compared to the same period in 2019 (from 40.7% in 2019 to 26.2% in 2020).

Import and export activities reached a record export surplus, becoming a bright spot for Vietnam’s economic growth.

Source: VIRAC, GSO

The fact that the Vietnamese Government has performed well in the prevention of epidemics, taking advantage of the benefits from agreements such as EVFTA, CPTPP, VCFTA, ACFTA, … has helped the total import and export turn over of the country in the country. in 2020, up 5.5% compared to the previous year, reaching 545.4 billion USD, reaching a super-record level, becoming a bright spot of Vietnam’s economy. Specifically, the total export turnover of Vietnam is estimated at 282.7 billion USD, up 7% compared to 2019. Of which, the domestic economic sector reached 79.8 billion USD, the foreign investment sector reached 202.9 billion USD. The total import value is estimated at 262.7 billion USD, up 3.7% over the same period last year, of which the domestic economic sector reached 93.7 billion USD; foreign investment sector reached 169 billion USD. For the whole year 2020, the trade balance will continue to record a trade surplus of 20 billion USD (an increase of nearly 80% over the same period last year), of which the domestic economic sector saw a trade deficit of 13.9 billion USD; foreign investment sector (including crude oil) saw a trade surplus of 33.9 billion USD.

However, Vietnam’s import and export still depends heavily on FDI inflows. Export turnover of FDI enterprises accounts for 71.8% of total export turnover in 2020. Import turnover of FDI enterprises accounts for 64.3% of total import turnover.

Stabilizing inflation in the context of a year with many unpredictable changes.

Source: VIRAC, GSO

The consumer price index in 2020 increases by 3.23% over the same period last year. Thus, the National Assembly’s target of controlling inflation and keeping the average CPI in 2020 below 4% has been achieved in the context of a year with many unpredictable changes.

The increase in CPI in 2020 is explained by a number of reasons. January and February are Tet, so the demand for shopping increases, the average food prices in 2020 increased 4.51% over the previous year, contributing to the overall CPI increase of 0.17%. The rice price in 2020 increased by 5.14% compared to the previous year due to the increase in export rice prices along with increasing domestic consumption demand. The price of food products in 2020 increased by 12.28% compared to the previous year, contributing to the increase of CPI by 2.61%, mainly due to the increase in prices of fresh food items during the Lunar New Year, especially the increase in pork prices. Because the supply is not guaranteed, the price of pork increased 57.23% compared to the previous year, making the overall CPI increase 1.94%. Accordingly, the price of processed meat increased by 21.59%; lard increased 58.99% over the previous year. Due to the impact of storms and floods in the central provinces in October and November, the area of ​​vegetables and crops was heavily flooded, many ponds, lakes, barns were damaged, swept away, … causing vegetable prices. fresh, dried and increased processing. Due to the still complicated effects of Covid-19 in the world, the demand for a number of medical supplies, medicines for prevention and treatment in the country and for export is high, so the price of these items tends to increase. direction of slight increase. By 2020, on average, prices of drugs and medical equipment will increase by 1.35% over the previous year. The price of education services in 2020 will increase by 4.32% compared to 2019 because provinces and centrally-run cities increase tuition fees for the new school year 2020-2021.

Gold prices rose to record high in the difficult economic context.

Source: VIRAC, GSO

The year 2020 marked a volatile year for the domestic and international gold market. The COVID-19 was the main factor that dominated the gold market in the past year, which has caused precious metals to fluctuate. The domestic gold price in 2020 will fluctuate according to the world gold price. On average, in 2020, the price of gold increased by 28.05% compared to 2019.

Specifically, the domestic SJC gold price in the first half of July 2020 remained above the threshold of VND 50 million / tael, up 28.57% over the same period in 2019, the highest since 2011. The highest increase fell in August 2020 when the gold price increased by more than 35% over the same period.

The great effort of the entire Vietnamese banking system in credit growth.

Source: VIRAC, GSO

As of December 31, 2020, the credit balance of the economy reached nearly 9.2 million billion VND, an increase of about 12.13% compared to the end of 2019 (the same period in 2019 increased by 13.65%). Although credit growth in 2020 was not as high as expected in early 2020, the results showed a great effort of the entire banking system in the context of the economy affected by the Covid-19 epidemic. Since the beginning of the year, the State Bank has 3 times reduced the operating interest rate to support liquidity for credit institutions, reducing the cost of borrowing capital for businesses and people. The maximum short-term lending interest rate in VND for a number of popular industries and fields is 5% / year.

Forecast of Vietnam’s economic growth in 2021, opportunities and risks for Vietnamese goods industries.

In terms of economic growth target, Vietnam GDP growth of 6% by 2021 is relatively feasible. There are three reasons to be optimistic about Vietnam’s economic prospects. First, the main growth drivers such as investment and export are forecasted to maintain a positive trend next year. Specifically, looking back to 2020, data from the General Statistics Office shows that, in terms of investment, the realized social investment capital reaches more than 2,164 trillion VND, an increase of 5.7% compared to 2019, especially the growth rate. realized capital from the state budget in 2020 reaches the highest level in the period 2011 – 2020. Regarding exports, the total export turnover of goods will reach more than 281 billion USD, an increase of 6.5% compared to 2019; Trade balance of goods in 2020 is estimated to have an export surplus of 19.1 billion USD, the highest level in 5 years of trade surplus since 2016. Second, Vietnam’s economy has clearly recovered in a “V” shape since Q3 / 2020 and will grow quite well in 2021. Third, at present, Covid-19 vaccine is starting to be provided in many countries around the world, which is a positive signal for the prevention and control of Covid-19 epidemic. to support the recovery of global economic development, including many important trading partner economies of Vietnam.

It is forecast that in 2021, inflation will continue to be tightly controlled. In addition, oil prices tended to recover in Q4/2020, but pork prices also decreased significantly compared to the peak from Q3/2020, other commodities fluctuate slightly due to the slow recovery, especially Travel and entertainment groups,…

Regarding the implementation of the state budget estimate, according to the 2021 budget estimate approved by the National Assembly, the total state budget revenue in 2021 is estimated at 1,343,330 billion VND. Total state budget expenditure is 1,687,000 billion VND. The state budget deficit is 343,670 billion VND, equivalent to 4% of GDP, of which the central budget deficit (Central Central Government) is 318,870 billion VND (3.7% of GDP), the local budget deficit (local budget) is 24,800 billion VND ( 0.3% of GDP). The total loan amount of the state budget is 608,569 billion VND.

The forecast also shows that the credit growth room for 2021 is huge thanks to the ample amount of money from the second half of 2020. It is forecasted that 2021 credit growth will be about 12%. However, credit flows will have a large differentiation and will be directed to 5 priority industries such as high-tech agriculture, manufacturing, and high technology, …

In 2021, the lending interest rate level is likely to inch up. Vietnam’s economy is forecasted by many international organizations to recover quickly, achieving a fairly high growth rate in 2021. For example, the World Bank predicts that Vietnam’s GDP in 2021 may reach 6.8%, or the International Monetary Fund forecasts that Vietnam’s economic growth in 2021 will reach 6.7%,…. When the economy recovers from a high growth rate, the capital needs of the economy, businesses will increase, demand for goods, services, consumer demand of the people will also increase … interest rates will inch up.

The exchange rate of the forex market may still be under pressure around volatile events, but it will fluctuate by ± 0.5% for the full year 2021.

Besides the forecasts above, Vietnam will have to face many risks such as:

Inflation risk: By 2021, Vietnam may reach the target of controlling inflation below 4% but there are always certain factors that put pressure on inflation.

Risks from global geopolitical instability. Experts predict that 2021 will be a challenging year for the world, when the tense international competitive environment creates huge geopolitical risks. The risks can be mentioned as: fluctuations in US-China geopolitical tensions; US presidential election; concerns about Brexit; geopolitical tensions between India and China and the US-Iran; election to form a new government in Israel amid prolonged political instability, ….

Risk from exchange rate fluctuations. USD exchange rate is at the lowest level of nearly 3 years, in the context of investors pouring money back into higher-risk assets. It is forecasted that the devaluation trend of the greenback will continue in 2021. This means that the VND is stronger, which may cause difficulties for Vietnam’s export activities in the coming time.

Risks from FDI inflows. Growth depends heavily on the FDI sector, especially on some key products, some large enterprises such as Samsung, Formosa, so when these products have fluctuations, it will immediately affect the economy. Besides, unofficial FDI inflows are also flowing into Vietnam much beyond the announced numbers. For example through real estate buying channels; Foreign banks lend a huge amount of money to domestic private enterprises… Those are ways to bring in informal cash flows, difficult to control and many risks.

Disease risk. By 2020, the world in general and Vietnam in particular will be affected negatively by the Covid-19 epidemic. Although Vietnam is doing well in controlling the epidemic, epidemic developments are still complicated in many countries around the world, the risk of epidemics returning and threatening the economy cannot be taken into account. Especially in the context of globalization, trade and travel between countries is essential.

Risks of climate change and environmental pollution. According to the report of the National Center for Socio-Economic Information and Forecasting, the Ministry of Planning and Investment (NCIF), the Vietnamese economy is facing considerable challenges and pressure due to the impact of weakness. weather factors and environmental pollution during development. In the past 2020, Vietnam’s economy and people’s lives will be affected by climate change. Consecutive natural disasters in the Central region from mid-September to mid-November have left 192 dead and 57 are still missing. Total economic loss is about 30,000 billion VND.

Leave a Reply

Your email address will not be published.