Singapore-based United Overseas Bank (UOB) has raised its prediction for Vietnam’s economic growth in 2021 to 7.1 percent from 6.6 percent.

The forecast was released by the UOB Global Economics & Markets Research department in the ‘Quarterly Global Outlook 4Q 2020’ report.

The department, however, lowered Vietnam’s GDP forecast in 2020 to 2.8 percent from 3.5 percent.

According to the UOB report, Vietnam’s economy managed to expand 0.36 percent in the second quarter, despite the impacts of the COVID-19 pandemic.

As “the disruptions from [the] second wave of COVID-19 infections have faded, recovery momentum has been knocked off course temporarily” in Vietnam, UOB said, the country’s GDP growth is set to recover from three percent in the third quarter to four percent in the last quarter.

The two quarters’ forecasts were both trimmed down compared to prior projections of 4.5 percent and 5.5 percent, respectively.

“This will result in a lower full-year projection for 2020 at 2.8% (previous forecast: 3.5%), but higher for 2021 at 7.1% (previous projection: 6.6%),” the report reads.

Given a relatively large share of tourism at 12.4 percent of the country’s GDP, Vietnam will find it challenging to achieve the full potential in the course of its recovery, UOB forecast.

In addition, uncertainty and potential downside risks ahead would leave room for the State Bank of Vietnam (SBV) to make one more rate cut this year, the Singapore-based lender anticipated.

The SBV has cut policy rates four times so far this year.

All this notwithstanding, Vietnam is set to be the only one of six major Southeast Asian economies to achieve positive growth this year while the rest are expected to contract.

Before UOB, the Hong Kong and Shanghai Banking Corporation (HSBC) also revised its 2020 GDP forecast for Vietnam to 2.6 percent from three percent.

HSBC expected the Southeast Asian country’s economy to grow 8.1 percent in 2021, compared to the previous projection of 8.5 percent.

This year, the Vietnamese government set a growth target of 2.5 to three percent.

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