{ "title": "Vietnam: Successfully Navigating the Pandemic", "publication": "IMF News, March 10, 2021", "sourceUrl": "https://www.imf.org/en/news/articles/2021/03/09/na031021-vietnam-successfully-navigating-the-pandemic", "canonical": "https://www.imf.org/en/news/articles/2021/03/09/na031021-vietnam-successfully-navigating-the-pandemic", "overlayPath": "/en/news/articles/2021/03/09/na031021-vietnam-successfully-navigating-the-pandemic/index.md", "summary": "Despite the challenges of the COVID-19 pandemic, Vietnam’s economy has remained resilient, expanding by 2.9 percent in 2020—one of the highest growth rates in the world—and growth is projected to be 6.", "authors": [ "Era Dabla-Norris", "Yuanyan Sophia Zhang IMF Asia", "Pacific Department March" ], "publishDate": "2021-03-10", "sections": [ { "heading": "Key findings", "content": "- Vietnam’s economy expanded by 2.9 percent in 2020.\n- Growth is projected to be 6.5 percent in 2021.\n- Strong economic fundamentals, decisive containment measures, and well-targeted government support underpin resilience.\n- Early rebound of domestic activities and robust export performance, particularly higher-tech electronics exports, supported 2020 growth." }, { "heading": "Public health and containment measures", "content": "- Swift introduction of containment measures, aggressive contact tracing, targeted testing, and isolation of suspected COVID-19 cases kept recorded infections and death rates notably low on a per capita basis.\n- Successful containment reduced both health and economic fallout and limited the size of the emergency response package." }, { "heading": "Pre-pandemic fundamentals and buffers", "content": "- Since the advent of market-oriented “Doi Moi” reforms in 1986, Vietnam transformed from one of the poorest countries to lower middle-income status.\n- Structural transformation toward foreign direct investment-led manufacturing and a focus on “leaving no one behind” boosted living standards.\n- Strong foreign investment and current account surpluses strengthened external resilience.\n- The banking system improved with higher profitability, liquidity, and fewer non-performing loans than in the past.\n- Considerable progress in consolidating public finances prior to COVID-19 built fiscal, external, and financial buffers that increased resilience to the shock.\n- Despite progress, significant room remains to boost productivity and improve economic resilience." }, { "heading": "Macroeconomic policy priorities (near-term)", "content": "- Macroeconomic policies should remain supportive in 2021 to ensure a resilient and inclusive recovery.\n- Near-term policy focus:\n - Sustain employment while fostering reallocation of resources.\n - Use hiring subsidies and active labor market policies to incentivize job training.\n - Permanently scale up coverage of the existing social safety net and improve its efficiency.\n- Over time, policies should aim to reduce labor informality by improving labor skills, lowering hiring/firing costs for formal workers, and encouraging firm formalization." }, { "heading": "Financial stability and corporate sector", "content": "- Corporates entered the crisis with relatively weak balance sheets, particularly small and medium enterprises that dominate the hardest hit sectors.\n- COVID-19 has further deteriorated liquidity and solvency positions, raising financial stability concerns through bank exposures.\n- Monetary, fiscal, and financial sector policies implemented by the government helped mitigate immediate risks of a surge in corporate defaults and mass layoffs.\n- Policy guidance:\n - Better target support to illiquid but viable firms until the recovery is firmer.\n - Continue strong supervision and timely efforts to address problem loans.\n - Strengthen regulatory and supervisory frameworks to address financial system risks." }, { "heading": "Structural reforms to boost productivity", "content": "- More decisive reforms are needed to tackle pervasive low productivity and realize Vietnam’s growth potential.\n- Reform priorities:\n - Improve the business environment and ensure a level playing field for small and medium-sized enterprises.\n - Reduce regulatory burden faced by firms.\n - Improve firms’ access to resources, governance, technology, and innovation.\n - Reduce skills mismatches.\n- These reforms would help Vietnam reap greater benefits from participation in global value chains in the post-pandemic world.\n\nIMF News — \"Vietnam: Successfully Navigating the Pandemic\", March 10, 2021.\n\n---\n\n\n References\n\n- https://www.imf.org/en/News/country-focus\n- PRESS CENTER\n- annual assessment\n- Read the press release\n- Vietnam and the IMF\n- Divergent Recoveries in Asia\n- https://www.imf.org/en/home\n\nSource: https://www.imf.org/en/news/articles/2021/03/09/na031021-vietnam-successfully-navigating-the-pandemic" } ], "bullets": [ "[Markdown version](/en/news/articles/2021/03/09/na031021-vietnam-successfully-navigating-the-pandemic/index.md)", "[Structured JSON version](/en/news/articles/2021/03/09/na031021-vietnam-successfully-navigating-the-pandemic/index.json)", "[Bundle manifest](/en/news/articles/2021/03/09/na031021-vietnam-successfully-navigating-the-pandemic/bundle-manifest.json)", "Authors: Era Dabla-Norris, Yuanyan Sophia Zhang IMF Asia, Pacific Department March", "Published: March 10, 2021", "Vietnam’s economy expanded by 2.9 percent in 2020.", "Growth is projected to be 6.5 percent in 2021.", "Strong economic fundamentals, decisive containment measures, and well-targeted government support underpin resilience.", "Early rebound of domestic activities and robust export performance, particularly higher-tech electronics exports, supported 2020 growth.", "Swift introduction of containment measures, aggressive contact tracing, targeted testing, and isolation of suspected COVID-19 cases kept recorded infections and death rates notably low on a per capita basis.", "Successful containment reduced both health and economic fallout and limited the size of the emergency response package.", "Since the advent of market-oriented “Doi Moi” reforms in 1986, Vietnam transformed from one of the poorest countries to lower middle-income status.", "Structural transformation toward foreign direct investment-led manufacturing and a focus on “leaving no one behind” boosted living standards.", "Strong foreign investment and current account surpluses strengthened external resilience.", "The banking system improved with higher profitability, liquidity, and fewer non-performing loans than in the past.", "Considerable progress in consolidating public finances prior to COVID-19 built fiscal, external, and financial buffers that increased resilience to the shock.", "Despite progress, significant room remains to boost productivity and improve economic resilience.", "Macroeconomic policies should remain supportive in 2021 to ensure a resilient and inclusive recovery.", "Near-term policy focus:", "Over time, policies should aim to reduce labor informality by improving labor skills, lowering hiring/firing costs for formal workers, and encouraging firm formalization.", "Corporates entered the crisis with relatively weak balance sheets, particularly small and medium enterprises that dominate the hardest hit sectors.", "COVID-19 has further deteriorated liquidity and solvency positions, raising financial stability concerns through bank exposures.", "Monetary, fiscal, and financial sector policies implemented by the government helped mitigate immediate risks of a surge in corporate defaults and mass layoffs.", "Policy guidance:", "More decisive reforms are needed to tackle pervasive low productivity and realize Vietnam’s growth potential.", "Reform priorities:", "These reforms would help Vietnam reap greater benefits from participation in global value chains in the post-pandemic world.", "[https://www.imf.org/en/News/country-focus](https://www.imf.org/en/News/country-focus)", "[PRESS CENTER](http://presscenter.imf.org/)", "[annual assessment](https://www.imf.org/en/Publications/CR/Issues/2021/02/24/Vietnam-2020-Article-IV-Consultation-Press-Release-Staff-Report-and-Statement-by-the-50121)", "[Read the press release](https://www.imf.org/en/News/Articles/2021/03/01/pr2155-vietnam-imf-executive-board-concludes-2020-article-iv-consultation)", "[Vietnam and the IMF](https://www.imf.org/en/Countries/VNM)", "[Divergent Recoveries in Asia](https://blogs.imf.org/2021/02/23/divergent-recoveries-in-asia-history-is-not-destiny/)", "[https://www.imf.org/en/home](https://www.imf.org/en/home)" ], "alternates": { "markdown": "/en/news/articles/2021/03/09/na031021-vietnam-successfully-navigating-the-pandemic/index.md", "json": "/en/news/articles/2021/03/09/na031021-vietnam-successfully-navigating-the-pandemic/index.json", "bundleManifest": 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