The effect of the first year of term, the “tonic” effect, investment and improved risk … make 2021 the year to start a new growth cycle.
The boom in Covid-19 dragged 2020 to the bottom of an economic cycle when the growth for the whole year was only 2.91% – the lowest level in a decade.
However, thanks to the successful anti-epidemic results and comprehensive economic stimulus packages, the Government’s dual goals of fighting against epidemics and recovery and socio-economic development have been successful. GDP in the fourth quarter increased by 4.48%, higher than the figure of 2.69% in the third quarter, making the trend of economic recovery more solid and the year 2021 is expected to start a new growth cycle because the following features.
Effect of the first year of term
The XIII Party Congress, scheduled to be held in early 2021, is an important and decisive political event of the next 5 years. The undertakings, lines and policies proposed by the Congress will become an important direction for the country’s development in all aspects, especially the economy.
The growth model based on labor and resource intensity, which has been successful and contributed to the country’s development for more than 35 years of innovation and integration, is now no longer suitable for internal conditions. as well as international circumstances in the new era.
Accordingly, science, technology and innovation are considered as the main pillars in the new growth model of the Vietnamese economy. This will usher in the next phase of development fueled by these first-seen economic drivers.
New models and policies need to be driven by innovative and creative thinking. After the Congress, the government from central to local will have new leaders. Certainly, in the first year of their term, they will make their best efforts, show their talent in operating and leading the country with drastic measures to implement the guidelines and guidelines set by the Congress. Therefore, the year 2021 may become the tipping point of the next growth cycle.
The “tonic dose” comes into play
The social gap, the suspension of economic activities to fight the Covid-19 epidemic in 2020 has made the health of the economy extremely weak. Therefore, the Government has launched a lot of economic stimulus, pain relief and support packages, such as tonic doses.
Relief packages from direct to indirect for workers, the business sector, stimulate domestic consumption on a large scale, promote public investment and increase exports. Monetary and fiscal policy was also relaxed to the maximum. The public investment package of more than VND 700,000 billion has been disbursed more than 70% and projects are being urged day and night to ensure progress.
But the ailing state of the economy at that time could not absorb all of these stimulus packages. The above capital sources are mostly left in the transmission channels, creating a cheap capital flow effect. Therefore, these will be a very strong driving force to resonate with the factors of open policy mechanism mentioned above, promote the economic movement and start to accelerate in 2021.
Improved risk appetite
During the year 2020, the uncertain developments of the epidemic and coping solutions such as social stretching and economic blockade made many people afraid. And there is no economic stimulus against that fear unless it is believed that the epidemic has actually been controlled and repelled. The vaccine trial, if successful in humans, will be widely vaccinated in 2021 as a guarantee that everything is safe for the community.
At that time, many people will inevitably go to work, more determined, and try harder to make up for the shortages and losses of the old year. This makes economic activities exciting next year. Business projects, plans, investment decisions because Covid-19 had previously had to be postponed, or because of financial and credit constraints that had lost the viability, are now available. opportunity to restart, with greater effort and determination.
It is important that the psychological and behavioral effects now make people more willing to take higher risks because fear has been dispelled and confidence in the macro environment is significantly improved with The above optimistic signals.
High determination, daring to accept more risks, psychological efforts to adapt to the resonated “new normal state”, driven by open economic policies, loosening financial-credit conditions, capital and input conditions of production and business are made easier. These will induce a sustainable recovery and steady growth. That process, if well maintained, will create an important movement for the economy in a new period.
A new generation of businesses
Covid-19 swept through the entire world economy and Vietnam like a tough filter and elimination of pain for businesses. The law of evolution is tough, but it brings growth. Companies and organizations that cannot withstand have been dissolved or go bankrupt, but there are also thousands of newly established businesses as well as many businesses that have transformed their business models and operating forms. success.
Typically, a company famous for its distribution system of mobile phones and electronic goods nationwide has launched the service “go to the market for you – delivery to the place” in a very short time to enjoy. the suspicion of social disparity makes retail stores almost paralyzed.
Or as many farmers, from unfamiliar with the internet, are forced to learn so that they can use social media to promote and trade agricultural products during the period of isolation against epidemics. And the wood enterprises from only exporting raw materials to the Chinese market have switched to producing finished products with better quality and designs to conquer fastidious markets or domestic consumption … These are examples of Covid-19 making for a better new business development.
A survey conducted by the World Bank and the General Statistics Office of Vietnam showed that as of September this year, more than 60% of businesses in the survey have successfully converted to digital Unrest in the business environment influenced by Covid-19. The next decade has created pressure but also brought many opportunities for new businesses and business models.
Innovative business ideas and models that are motivated, promoted by breakthrough policy mechanisms, supported by cheap investment capital, absorbed by aggregate demand recovery, will motivate. generation of a new business generation. This generation of businesses is sure to create a new cycle of growth.
Assoc.Prof.Dr. Nguyen Khac Quoc Bao
Lecturer at University of Economics, HCMC