Vietnam Welcomes New Year with Economic Recovery

Vietnam cited its textile and garment sector as one of the keys to its economic recovery.
Vietnam cited its textile and garment sector as one of the keys to its economic recovery.

Generally speaking, the worst hit by the pandemic is the economy. However, this year Vietnam is optimistic that they will recover despite the Omicron variant.  The country welcomes the new year with economic recovery.

Ditching the “Zero-Covid” Policy for Economic Recovery

The country ditched its “Zero-Covid” policy as its textile and garment sector recovered in the past several months. This is after the companies’ unexpected wave of layoffs.

Vietnam is not the only exporter of textile and garments to the European Union (EU). Other exporting countries include Bangladesh, Burma, and Cambodia. Last year, this sector was one of the best performing industries with a 2.9% growth.

Production increased due to China’s high demand for the past year. Adidas, New Balance, Nike, Puma, and other companies rely on Vietnam for mass production.

Vietnam’s Increased Growth Rate in 2022, Possible

The Southeast Asian country targets a 6.3% growth rate this year and 6.8% next year. This is possible, but it still depends on how the pandemic ensues over the succeeding years. Its food and beverage industry has a promising outlook for this year.

“That looks too optimistic now. But even half of that level would provide a boost to Vietnamese exports. On Sept 23, in an important move, the Vietnamese government noted that appropriate measures and steps are needed to ‘adapt safely and flexibly’ or ‘live together’ with the pandemic,” said Jonathan Pincus, UNDP Senior Economist.

Last year, the country’s growth was about 3%. It is one of the highest worldwide during the initial year of the pandemic. The Central Institute for Economic Management predicts that Vietnam’s economy will grow by 6%. World Bank, on the other hand, projects 6.8%. If this happens, Vietnam will have a good road to economic recovery.

During 2021’s first half, the country’s gross domestic product increased by 5.64%. The total number of re-operated enterprises and newly established businesses reached 93,200. However, the number of companies that temporarily suspended businesses and ceased operations reached 70,200. It includes those that wait for dissolution processes and complete dissolution processes.

Recommendations from UNDP for Faster Economic Recovery

Since August of last year, the UNDP has been giving Vietnam some recommendations for faster economic recovery. The program suggests a universal cash assistance program of GDP’s 1.25% to support domestic consumption. It will help struggling families to make both ends meet because they lost their jobs due to the pandemic. Also, it will assist those who have businesses that went bankrupt or not earning money.

The UNDP also recommends launching universal child assistance that will benefit all children aged six and below. Older people aged 60 and older will likewise take advantage of the program. The system will establish cash transfers according to their current identification cards or birth certificates.

Another important proposal is giving support to export industries. The government needs to organize workers’ safe travel from their home provinces to industrial grounds. Additionally, these workers need to have a safe abode once they get there.

Businesses Still Face Workforce Shortages

This year, Ho Chi Minh City is in need of 310,000 workers. According to Vn Express, when they contain Covid-19, businesses will require hundreds of thousands of workers.

The human resource’s demand for Q1 would be about 87,000. For Q2, it would be 72,000, for Q3 it’s 74,000, and 77,000 workers for Q4.

If the pandemic remains uncooperative, Ho Chi Minh City’s labor demand will be between 255,000-280,000 staff. It would be the highest in the year’s first quarter at more than 78,000.

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