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The effect of the first year of the term, the “tonic” effect, the investment and the improvement in risk … make 2021 the year to start a new cycle of growth.
The Covid-19 boom dragged 2020 to the bottom of a business cycle in which full-year growth was just 2.91%, the lowest level in a decade.
However, thanks to successful anti-epidemic results and comprehensive economic stimulus packages, the dual objectives of the Government of fighting epidemics and socio-economic recovery and development have been successful. GDP in the fourth quarter increased by 4.48%, higher than 2.69% in the third quarter, which makes the economic recovery trend more solid and it is expected that 2021 will start a new growth cycle because the following characteristics.
Effect of the first year of mandate
The XIII Party Congress, scheduled for early 2021, is an important and decisive political event for the next 5 years. The commitments, lines and policies proposed by Congress will become an important course for the development of the country in all aspects, especially the economic one.
The growth model based on the intensity of labor and resources, which has been successful and contributed to the development of the country during more than 35 years of innovation and integration, is no longer adapted to internal conditions. as well as international circumstances in the new era.
Consequently, science, technology and innovation are considered the main pillars of the new growth model of the Vietnamese economy. This will usher in the next stage of development driven by these economic drivers seen for the first time.
New models and policies must be driven by innovative and creative thinking. After Congress, the central to local government will have new leaders. Certainly, in the first year of their mandate, they will do their best, show their talent to operate and lead the country with drastic measures to implement the guidelines and guidelines set by Congress. Therefore, the year 2021 may become the turning point of the next growth cycle.
People shop at HCMC supermarkets. Image: Nhu Quynh.
The “tonic dose” comes into play
The social gap, the suspension of economic activities to combat the Covid-19 epidemic in 2020 has greatly weakened the health of the economy. Therefore, the Government has launched many economic stimulus, pain relief and support packages, such as tonic doses.
Direct to indirect aid packages for workers, the business sector, stimulate large-scale domestic consumption, promote public investment, and increase exports. Monetary and fiscal policy was also relaxed to the maximum. More than 70% of the public investment package of more than $ 700 billion has been disbursed and projects are being urged day and night to ensure progress.
But the poor state of the economy at the time was unable to absorb all these stimulus packages. The above sources of capital are mostly left in the transmission channels, creating a cheap capital flow effect. Therefore, these will be very strong motivations to resonate with the above-mentioned open policy and mechanism factors, promote the economic movement and begin to accelerate in 2021.
Greater appetite for risk
Throughout 2020, the uncertain evolution of the epidemic and coping solutions such as social stretching and economic lockdown have frightened many people. 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 point, many people will inevitably go to work, more determined, and try harder to make up for the shortages and losses from the previous year. This makes economic activities exciting next year. Business projects, plans, and investment decisions due to Covid-19 having previously had to be postponed or due to financial and credit constraints that had lost 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 greater risks because fear has dissipated and confidence in the macro environment has improved significantly with the optimistic signs above.
High determination, daring to accept more risks, psychological efforts to adapt to the resounding “new normal state”, driven by open economic policies, making financial and credit conditions more flexible, and facilitating the conditions of production and capital and input business. These will induce a sustainable recovery and steady growth. That process, if well maintained, will create a major movement for the economy into a new period.
A corner of the Hanoi Highway (District 2) towards the center of Ho Chi Minh City. Image: Quynh Tran.
A new generation of companies
Covid-19 spread throughout the world economy and Vietnam as a hard filter and elimination of pain for businesses. The law of evolution is tough, but it generates growth. The companies and organizations that cannot resist have been dissolved or bankrupt, but there are also thousands of newly established companies, as well as many companies that have transformed their business models and ways of operating. success.
Typically, a company famous for its nationwide mobile phone and electronic product distribution system has launched the “go to market for you – delivery to place” service in no time to enjoy. Suspicion of social disparity brings retail stores to a near standstill.
Or like many farmers, unfamiliar with the Internet, they are forced to learn in order to use social media to promote and market agricultural products during the period of isolation against epidemics. And the logging companies of only exporting raw materials to the Chinese market have gone on to produce finished products with better quality and designs to conquer demanding markets or domestic consumption … they are examples of Covid-19 for better development of new businesses.
A survey conducted by the World Bank and Vietnam’s General Statistics Office showed that as of September this year, more than 60% of the companies in the survey have successfully converted to digital technology. Unrest in the business environment caused by Covid-19. The next decade has created pressure, but it has also brought many opportunities for new businesses and business models.
Innovative business models and ideas motivated by revolutionary policy mechanisms, backed by cheap investment capital, absorbed by the recovery in aggregate demand, will motivate. life a new generation of companies. This generation of businesses will surely create a new cycle of growth.
Associate Professor Dr. Nguyen Khac Quoc Bao
Professor at the University of Economics, HCMC
