The economy of Vietnam continued its expansion in the first three months of 2021 as reported by the General Statistics Office. The gross domestic product (GDP) of one of the best performing economies in the South-East Asian region has increased by 4.48% as reported by the General Statistics Office (GSO). The authorities’ successful efforts to curb the Covid-19 spread and in keeping strong measures in place are cited as the main factors leading to the improving economic growth.

The 4.48% GDP growth rate has been an improvement compared to the 2020 Q1 3.82% GDP growth rate in Vietnam and in consideration of data from other countries in the region and worldwide. The results indicate that the country has successfully realized two objectives simultaneously, the effective management of the Covid-19 pandemic, as well as the achievement of high and stable economic growth. The authorities have once more emphasized the target of a 6.5% annual growth rate of GDP to be achieved in 2021. Despite a number of challenges, a general consensus is that Vietnam shall achieve this milestone as long as the vaccination is rolled out actively among the population and the authorities provide support to private business and accelerate the existing and planned public investment projects.

The GSO reported an increase in exports by 22% to USD 77 billion in Q1 in 2021, while imports were up by 26.3% to USD 75 billion, resulting in a trade surplus of over USD 2 billion. At the same time, the industrial and construction sectors in Q1 grew by 6.3% year-on-year, the services sector expanded by 3.34%, and the agricultural sector rose by 3.16%.

Overall, the country entered the Covid-19 pandemic with strong economic fundamentals. The increased foreign direct investment in Vietnam in recent years and current account surplus served as significant buffers in times of crisis. Furthermore, the overall health of the banking sectors improved with fewer non-performing loans than in the past decade and improving profitability ratios.

Vietnam is seen as one of the best performing economies in 2021 by market practitioners and is on path to a strong GDP growth in 2021. At PHC Advisory, we continuously monitor the recent updates of the tax policy in Vietnam. Please feel free to contact us at info@phcadvisory.com for more information.