Vietnam showed significant economic growth as its GDP grew by 6.61% in the second quarter of 2021 and is expected to grow to 6.7% by the end of the year. Despite the challenges faced by the economic slowdown due to the covid-19 pandemic, Vietnam shows a promising prospect for economic growth and investments. This article gives a brief report for Vietnam’s GDP in 2021 and how well it is posed to grow in the future.
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GDP Growth in Vietnam & Outlook for 2021
According to Vietnamese government data, the country’s Gross Domestic Product (GDP) grew 6.61% in the April-June quarter, demonstrating the country’s economic recovery.
Despite multiple COVID-19 outbreaks among the manufacturing employees in northern Vietnam, Vietnam’s economy continues to expand thanks to the robust exports of smartphones and other products. According to the General Statistics Office, the economy grew 5.64% in the first half of this year, up from 1.82% a year before.
Exports to the United States grew by 42.6% to US$44.9 billion in the first half of 2021, further assisting the GDP growth. Overall exports rose by 28.4%, amounting to a total of US$157.63 billion. In addition to that, Samsung Electronics, a South Korean technological behemoth that accounts for around 20% of Vietnam’s exports, has continued to ramp up smartphone production in the country.
Reasons Behind Vietnam’s GDP Growth in 2021
Following are a few reasons why Vietnam’s GDP showed promising growth in the first and second quarter of 2021:
- Vietnam is working to develop its infrastructure to help its export economy. The construction of two additional terminals at Lach Huyen Port in Haiphong’s northern city began in mid-May, with a total cost of 7 trillion dongs ($304 million) estimated.The quantity of freight handled by Haiphong Port Company rose 14% year-on-year to 7.12 million tonnes in the January-March quarter. Vietnam decided to extend the port because it expects the high volume growth to continue.
Significant Free Trade Agreements
- Strong economic recovery in China and the United States, Vietnam’s two largest trading partners, are projected to sustain the country’s growth momentum, as is Vietnam’s involvement in 15 key Free Trade Agreements involving practically all the advanced economies of the world. Thanks to Vietnam’s Free Trade Agreement with the European Union, exports of clothing, shoes, and other commodities to Europe grew as well.
A Young, Skilled & Cheap Labour Force
- Because of its low labor costs, Vietnam has become a popular destination for multinational corporations wishing to diversify their investment. Since the start of the Sino-U.S. trade war in 2018, corporations have increased their investment in Vietnam in order to escape punishing American tariffs on made-in-China items.Hon Hai Precision Industry, also known as Foxconn, a Taiwanese contract electronics maker, will invest an additional $700 million in Vietnam this year, with the goal of increasing revenue to $40 billion in three to four years from $6 billion in 2020.
Future Prospects and Investment Opportunities
Vietnam’s economic growth is bound to bounce back strongly in 2021 and 2022 from the aftermath of the pandemic, owing to its major growth drivers like manufacturing and services, public and private investments, and exports. According to the Asian Development Outlook 2021, Vietnam’s economy is foretold to grow 6.7% in 2021, and 7% in 2022.
In addition to the promising economic outlook, the Vietnamese Government’s efforts to improve the business and investment climate in Vietnam have pooled significant investment in the country.
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