WB Report: Economy Shows Strong Performance But Recovery Uneven Across Sectors

The World Bank’s Viet Nam Macro Monitoring Report is released on April 16, 2021

The report stated that while this growth rate remained lower than the pre-pandemic levels, it reflected the on-going recovery of the economy despite the third outbreak of community transmitted infections in February in Northern Viet Nam.

After slowing down in February, mobility picked up in March, reflecting the resumption of economic activities. Mobility in grocery markets and places of works recovered to the levels observed prior to COVID-19 in early February 2020.

Credit to the economy grew by 12.5 percent (y/y) in March 2021. This pace of expansion is close to the pre-COVID period, reflecting the effect of accommodative monetary policies of the State Bank of Viet Nam, the World Bank announced, adding that it helped provide adequate funds to finance the recovery of the economy.

Remarkably, the report highlighted that the fiscal balance was in surplus for the first time since the onset of the pandemic.

In the first quarter of 2021, the Government collected VND403.7 trillion of revenues (a 3.2 percent (y/y) increase) while total spending decreased by -0.4 percent (y/y) to VND341.9 trillion, resulting in a fiscal surplus of over VND60 trillion, which is 29 percent higher than a year ago.

High revenues reflected a stronger domestic sector and the solid growth of imports with taxes on international transactions increasing by 9.7 percent (y/y). Implementation of public investment was on track with a disbursement rate of about 13 percent, equivalent to the one achieved in the first quarter of 2020.

The World Bank suggested Viet Nam’s authorities consider further fiscal and monetary measures should the crisis persist, and the economy does not recover as quickly as expected.

Meanwhile, the nation should consider a tax deferral package that could help firms with working capital. Providing further support to families and individuals who are still affected by the shock will help strengthen private demand. Given the lingering effects of the crisis on businesses, the financial sector should be closely monitored.

By Thuy Dung