Economic experts in the financial and securities sectors from Singapore have stated that the Vietnamese economy has made a recovery in the third quarter of the year, despite its growth rate being weaker than forecast, with annual gross domestic product (GDP) growth reaching between 2.8% and 2.9%.

The nation’s GDP during the last quarter rebounded to 2.6% on-year, a significant rise from 0.4% in the previous quarter, although lower than the 2.7% predicted by private sector economists.

This indicates that the country’s recovery rate remains weak, largely caused following the recurrence of the novel coronavirus (COVID-19) pandemic in the central city of Da Nang in late July, according to UOB Bank research team leader Suan Teck Kin.

At present, Vietnamese authorities have successfully brought the pandemic under control and business activities have since made a return to normal, although they are still below their usual  level.

Economists Linda Liu and Chua Hak Bin of Maybank Kim Eng Securities Company believe that the nation has escaped recession amid the raging pandemic, although recovery has weakened due to the impact of the second outbreak.

Furthermore, Suan Teck Kin said that despite the worst impact of the pandemic appearing to be over, with signs that it is abating in other Asian countries, there is still "a long way to go" before the Vietnamese economy can return to pre-pandemic levels.

Current data indicates a "weak recovery" for the industry and service sectors, which makes up over 70% of the national economy. The service sector, which is heavily dependent on domestic tourism, has been hit by closed borders worldwide, with the situation anticipated to be bleak for some time.

Kim has hopes that the local economy will start to recover ahead in the fourth quarter of the year, but at a limited speed due to the impact of the ongoing pandemic. Indeed, the country is likely to achieve 4% GDP growth during the fourth quarter, with GDP growth for the entire year expected to be at 2.8%, he added.

As a result of these forecasts, economists from Maybank Kim Eng have lowered their forecast for the nation’s fourth quarter GDP growth from its previous level of 6% to 4.5%, whilst their expectations for GDP growth for the whole year has fallen from 3.6% to 2.9%, stating that "the recovery seems to be weakening".

These experts believe that the industry and construction sectors will continue to lead the recovery, while the service sectors will suffer a further decline due to lower demand and a lack of a real tourism recovery.

However, experts at Maybank Kim Eng noted positive signs, with the retail commodity sector posting a higher than expected recovery with an increase from 3.6% in August to 4.9% in September. This showed that services that do not relate to tourism are starting to follow the recovery trend.