In its October country report, the bank says the pace of Vietnam’s recovery firmed up in September with its industrial production index growing 4.8 percent year-on-year, compared to 2.1 percent in August.

Other figures on manufacturing, retails sales of goods and domestic tourism also picked up after August, a month that saw hundreds of new Covid-19 cases recorded in the central city of Da Nang, the report says.

Although registered foreign direct investment in the first nine months fell nearly 19 percent to $21.2 billion, this is still a strong performance in the global context of FDI flows projected to decline by 30-40 percent.

However, unemployment and slow credit growth remain two main concerns for the economy, the bank says.

Labor force participation was at 74 percent in the third quarter, a drop of 2.4 percentage points year-on-year.

"Urban workers were most affected as they were more exposed to the mobility measures and restrictions."

Slow credit growth continued in September at 10.2 percent year-on-year, compared to an average of 16.2 percent over the previous five years.

This was caused by the banks’ fear of high lending risks during the economic downturn as well as lower demand from businesses despite the easing of monetary and lending conditions by the State Bank of Vietnam, the report says.

Despite these challenges, the World Bank forecasts a GDP growth of 2.8 percent for Vietnam this year, making it one of only two countries in ASEAN to record positive growth. The other country is Myanmar.

The bank expects the economies of Thailand, the Philippines and Malaysia to contract by 8.3 percent, 6.9 percent and 4.9 percent, respectively.