Vietnam's Economy in 2022
Due to the implementation of comprehensive economic reforms, Vietnam has been able to transform from being one of the world's most impoverished nations to a middle-income economy. From 2002 to 2020, the country's GDP per capita increased by almost 3%. The country's resilient economy was able to weather various crises, such as the COVID-19 pandemic. Although it was one of the first to post GDP growth after the pandemic, it's expected to grow at a slower pace in 2021.
Health care has also improved in Vietnam. The infant mortality rate has significantly dropped over the years. Life expectancy has also increased to 76.3 years. Almost a hundred percent of the population in Vietnam uses electricity as their primary source of lighting. Water quality has also improved due to the increase in access to clean water.
In 2045, Vietnam aims to become a high-income country. To reach this goal, the country's economy must grow at an average rate of 5% per capita for the next 25 years. Climate change, the rise of automation, and the increasing number of people living in the country are some of the megatrends shaping the country's future.
According to the World Bank, Vietnam needs to improve its policies and procedures in order to meet its development goals.
Strategy: The World Bank's Country Partnership Framework for Vietnam provides a framework for the organization's activities in the country from 2018 to 2022.
The framework aims to support the country's private sector and accelerate its inclusive growth. It aims to strengthen the private sector's participation in the country's development and financial stability. It also supports the reduction of poverty among ethnic minorities. In 2019, the World Bank Group conducted a review of the CPF. It confirmed the organization's commitment to supporting Vietnam's development objectives. It also expanded the scope of its activities to include the welfare of ethnic groups and the reduction of greenhouse gas emissions.
The Bank has granted and concessional loans to Vietnam worth $25.27 billion as of November 2021. The country has 33 active projects with a total net commitment of $6.69 billion. Vietnam's financial strength and its growing infrastructure development have made it an attractive target for international financial institutions. The country also benefits from a wide and diverse portfolio of advisory services and analytics (ASA).
COVID-19 Response (RESULT):
Since COVID-19 hit, the World Bank has been working with Vietnam on various fronts, including health crisis management, resilient recovery, and education reform.
Through a grant, the World Bank helped boost the capacity of 84 laboratories across the country. The project, which was carried out through the Bank's Pandemic Emergency Financing facility, reduced the turnaround time from 24-48 to 4-6. The Bank also issued a series of policy notes to help vulnerable groups protect themselves from the effects of COVID-19.
Clean Energy
The Bank also supported the construction of a 260-megawatt hydropower plant in central Vietnam. It became operational in 2017. The plant reduced greenhouse gas emissions by around one million tons annually. It also helped boost the local electricity supply. The Bank also provided financial assistance to support the deployment of renewable energy in Vietnam.
In addition, 19 small hydropower plants with a combined capacity of 320MW were also constructed. These projects set new industry standards in terms of social and environmental risk management.
Environment and Natural Resources
The World Bank's Climate Change and Green growth Development Financing Project supported the country's efforts to promote climate change and green growth. Through the program, the Bank helped promote the use of water-efficient technologies and innovative farming techniques. during the program, the country's household appliances have been more energy-efficient.
The Bank also helped improve the management of fisheries along the country's eight coastal provinces. From 2012 to 2018, the Bank supported the establishment of coastal districts and coastal communes with integrated spatial planning for the management of fisheries. With the project, the Bank helped 13,000 families improve their aquaculture practices by introducing new technologies.
Urban Development
It also helped low-income areas in the Mekong Delta Region get upgraded through the Urban Upgrading Project. Around two million people were directly benefited from the projects. They saved a total of $624 million in terms of healthcare costs, water damage, and productivity.
Rural Development
Through the Rural Water and Sanitation Program, the Bank was able to improve the conditions of water supply and sanitation in rural areas. From 2013 to 2019, more than a million households had water supply connections. Over 400,000 new connections were also made. In total, more than 1.4 million people in 203 communes were able to gain access to basic sanitation facilities. The Bank also built more than 142,000 latrines.
Human Capital : Education
In 2019, the country joined the Human Capital Project, which aims to improve nutrition and education. Through its School Readiness Program, the Bank was able to increase the number of children who have access to full-day preschool.
the Bank's Child-centered learning approach made preschool instruction quality improved in Vietnam. The program was also used to improve the country's workforce training.
Health:
Through the Health Care for All program, the World Bank supported Vietnam's efforts to improve the quality of healthcare services for its citizens. The Health System Support Project helped improve the treatment capacity of public hospitals in the country. In the project, various interventions such as cardiology, obstetrics, and pediatrics were provided at public hospitals, which could then be used by patients far from home.
Poverty Reduction:
Vietnam has made significant progress in reducing poverty, with the country's population living below the poverty line of US$3.20 per day in 2018. The Bank's partnership with Vietnam has been acknowledged by the Second Northern Mountains Project, which was carried out in six mountainous provinces from 2010 to 2018. The project helped ethnic minorities in the country raise their living standards. It also strengthened local governments' capacity to support community development.
Governance reform:
The World Bank's goal is to improve the integrity and efficiency of the public sector in Vietnam. Over the past couple of years, the Bank has been working with the country's Office of the Government. Through the Bank's work with OOG, the digital government development in Vietnam was assessed in 2019. In 2020, the country's Open Budget Portal was launched, which made budget information for all levels of government available in one place.
Conclusion:
The World Bank has raised its forecast for Vietnam's economic growth to 5.5 percent in 2022 from its previous estimate of 3.6 percent. While Vietnam has begun to decarbonise its trade, more work needs to be done to support businesses that are shifting their operations to greener products and services, the World Bank said. The report urged the Vietnamese government to support the development of green industries and encourage foreign direct investment.
The report noted that the impact of the COVID-19 pandemic on the country's economy was expected to be limited. The services and manufacturing sectors are expected to recover gradually, supported by the steady demand from the US, Europe, and China. Assuming the outbreak is under control, the recovery of the services sector and the manufacturing industry will help boost the country's economic growth. The budget deficit and debt will remain sustainable, the report said. The recovery is expected to be affected by various factors, such as the unknown course of the pandemic and the impact of new variants. The lack of sufficient fiscal and monetary space in many of its trading partners could slow the global recovery.
Experts from the World Bank said that policies that can support domestic demand, such as lower taxes and increased spending on education and health, could help mitigate the risks posed by the pandemic. However, the report also noted that social protection programs should be more targeted and coordinated to address the various social effects of the crisis.
Coffee Export:
In 2030, Vietnam is expected to receive up to $6 billion from its coffee exports, which is more than double the amount it earned in 2014. Experts said that the domestic coffee industry should increase its share of processed coffee products to 25 percent to 30 percent to reach the $6 billion target. Despite the robust growth, the country's coffee industry still faces challenges in increasing its share of processed products due to the complexity of farming and the lack of skilled workers.
The Central Highlands' coffee industry is expected to benefit from the establishment of logistics infrastructure to increase the production and value of the coffee beans. The implementation of the European Union's free trade agreement with Vietnam has opened up new opportunities for the country's coffee industry. The Ministry of Agriculture and Food plans to develop its own projects to export coffee to the EU.
The global price of coffee is expected to remain high due to the outbreak. It is also expected to limit supply from some of the world's coffee producing countries.
Pic Courtsey-Andrea Popa at unsplash.com
(The views expressed are those of the author and do not represent views of CESCUBE.)
