Hanoi’s impressive recovery contributes to driving national growth on track

Hanoi’s successful realization of the dual target of both containing the pandemic and boosting economic recovery helps ensure the country’s GDP growth on track to reach its target of 2.5 – 3% for this year.

Fabric production at Dong Phat company in Thach That-Quoc Oai industrial park. Photo: Danh Lam.

An early containment of the Covid-19 pandemic helped the city shift its focus to boosting economic growth. 

In 2020, the city has achieved and even exceeded 16 out of 22 major socio-economic development targets.

Hanoi’s gross regional domestic product (GRDP) growth is estimated to reach 3.94% this year, which is lower than the year’s target of 7.5% but would be 1.5 times higher than the national average.

The municipal consumer price index, a gauge of inflation, continues to stay under control at below 3%, lower than the 4% target set for the country this year.

Among highlights of the local economy, the city’s state budget revenue is forecast to reach VND280 trillion (US$12.13 billion), exceeding the estimate and up 3.5% year-on-year, while trade turnover could hit up to US$48.47 billion, 1.34 times higher than that  in 2015. This helps put the average export growth during the 2016-20 period at 9%, 1.7 times higher than in 2011-15.

Given Hanoi’s strong efforts in administrative reform and improving the business/investment environment, the city remains in the top three localities in terms of attracting foreign direct investment (FDI) and is ranked second behind Ho Chi Minh City in terms of number of operational enterprises at over 290,000, accounting for over 30% of the total number nationwide. 

Solid base for strong growth in future

CEO of HAXACO group, a leading Mercedes-Benz car dealer in Vietnam, attributed Hanoi’s effective supporting measures to the firm keeping strong revenue growth of 31.4% year-on-year in the first quarter at VND1.74 trillion (US$75.38 million).

“A surge in revenue  in the third quarter helped us offset declines in revenue in the previous two quarters during the Covid-19,” he noted.

Director of Hanoi CNC Accurate Mechanical Company Nguyen Minh Chau expected a bright economic outlook for the country in the post-Covid-19 period, adding “this was thanks in no small part to effective measures against the pandemic of Hanoi in particular, and Vietnam in general.”

“Enterprises, therefore, greatly benefited from this process,” he noted.

Chairman of Board of Viet Tiep lock company Luong Van Thang said during this difficult period, Hanoi’s authorities should set up task forces to provide timely support for the business community.

“Drastic measures from local authorities not only help enterprises overcome the current crisis, but to lay a platform for them to grow in the post-pandemic period,” he added.

So far, the city has provided over VND600 billion (US$25.98 million) for vulnerable people during the Covid-19 pandemic, and VND25 trillion (US$1.08 billion) in forms of freezing and delaying payment of taxes and fees for enterprises.

Hanoi’s economy is set for a strong rebound to 7.5% in 2021 from an estimated of 3.94% for this year, which would translate into an income per capita of VND135 million (US$5,800), significantly higher than the national average of US$3,700 and  a growth forecast of 6%. 

Other major economic indicators include the expansion of social investment by 12%, exports by 5%, inflation below 4% and a decline of 20% in the poverty rate under the city’s new standards.

For the period 2021-25, Hanoi sets a GRDP growth target of 7.5-8%, in which the services sector would make up 65-65.5%, industry and services 22.5-23% and agro-forestry-fishery 1.4-1.6%.