Vietnam’s position in the global supply chain continues to strengthen despite factories being shut down and mobility restrictions due to the Covid-19 pandemic.
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“Even with the supply chain and shutdown problems they have because of Covid right now, Vietnam is still going to do very well economically and it is becoming, every day, a more important piece of the global supply chain — especially for things that affect American consumers,” Adam Sitkoff, executive director of the American Chamber of Commerce in Vietnam (AmCham Vietnam) told Bloomberg Television.
The country has had stringent travel restrictions in its biggest cities, Ho Chi Minh City and Hanoi, for several months now even as the fourth wave of Covid that began at the end of April has infected over 559,000 people.
Many factories in southern Vietnam remain closed or are operating at limited capacity. The government is pushing vaccination but only 3.9 percent of the population has received two doses so far.
But Sitkoff still sees Vietnam attracting investment, including from further relocations out of China. He pointed to Vietnam’s best-in-Asia growth performance of 2.9 percent last year.
AmCham hopes Covid policies are “the least disruptive to business as possible” as firms look for ways to smooth deliveries leading into the critical year-end holiday season, he added.
Though several international organizations have cut their forecast for Vietnam’s growth, they retain a positive outlook on its recovery prospects.
“Beyond the near-term challenges, Vietnam’s medium-term economic prospects remain favorable,” analysts at ANZ said in a recent note.
But they warned about downside risks to the bank’s 5.2 percent full-year 2021 growth forecast for the country.
The pandemic has not changed Vietnam’s attractiveness as a manufacturing hub, and there is also ample room for policy support to nurture economic recovery further, the note added.
Standard Chartered bank has revised its GDP growth forecast for this year from 6.5 percent to 4.7 percent, while the World Bank has lowered its by two percentage points to 4.8 percent.
The economy grew by 5.6 percent in the first half of this year.
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