The Vietnamese economy will likely expand by 4.5-5.1% this year if the pandemic is contained at home by the end of September and vaccination is accelerated towards herd immunity in the second quarter of 2022.

The projection was made by the Vietnam Institute for Economic and Policy Research (VEPR) in its latest report on Vietnam’s economic performance, released on July 27.

The report notes that the economic outlook for the remainder of the year will depend on the virus situation, the vaccination rate, the effects and side effects of pandemic prevention measures and also support packages.

Under a more optimistic scenario when COVID-19 is curbed in August and inoculation is expedited to reach herd immunity in the first quarter of 2022, Vietnam’s growth is projected to be 5.4-6.1%.

But growth could be lower, at 3.5-4%, if the virus is not brought under control and economic activities do not return to normal until the fourth quarter and vaccination is slow due to a shortage of supply.

According to Dr. Vu Thanh Huong at the VNU University of Economics and Business, the growth drivers of the Vietnamese economy in 2021 will continue to be exports and public investment.

But export growth will rely on the global economic recovery while the public investment will be smaller than in 2020 due to limited fiscal resources, said Huong.

In addition, expansionary monetary policy or rate cuts are mainly intended to help reduce the burden of existing loans, rather than promote new borrowing to expand production .