Vietnam’s economy to expand 6.25% if coronavirus outbreak ends in Q1
Vietnam’s gross domestic product (GDP) growth is expected to reach 6.25% this year if the outbreak of the coronavirus, officially named Covid-19, is contained within the first quarter, according to the Ministry of Planning and Investment.
At a February 12 meeting with Prime Minister Nguyen Xuan Phuc to examine revised growth scenarios in the wake of the pneumonia-causing virus, the ministry said the figure is 0.55 percentage point lower than the full-year target of 6.8% set earlier this year.
Vietnam might fail to achieve its economic growth target as the epidemic continues to take a heavy toll on the global economy, it noted.
If the disease is contained in the second quarter, the country’s economic growth will be 5.96% this year, 0.84 percentage points lower than the original.
The ministry cited Professor Warwick McKibbin from the Australian National University, who counted losses for the world economy due to the Severe Acute Respiratory Syndrome outbreak in 2003 at US$40 billion and put the damage from Covid-19 at triple or quadruple this number, at US$120-160 billion.
The ministry also said Vietnam would suffer “significant impacts” due to its open economy, long border and busy trade with China, which have already manifested through the plummeting number of tourists, disrupted supply chain and backlogs of Vietnamese agricultural produce at Chinese border checkpoints.
The ministry further explained that the 6.8% target would be a tough task for Vietnam in the context of droughts, saltwater intrusion and the dual outbreaks of Covid-19 and bird flu.
The ministry pointed out that the novel coronavirus disease, which first emerged in the Chinese city of Wuhan late last year, has spread rapidly with severe and unexpected effects. So far, the country has yet to forecast the “peak virus” stage, ending time, scale and range of impact.
The disease will make a full impact on the economy. In addition, the psychology of the public, especially the labor force, will be influenced, resulting in an immediate shortage of labor, disruption to supply chains and sluggish trade circulation and production.
To fulfill the preset target of 6.8% for 2020, according to the ministry, Vietnam must attain outstanding growth rates of 4.52% in quarter one, 6.66% in quarter two, 7.67% in quarter three and 7.5% in quarter four.
Gov’t not to cut growth target
Speaking at the meeting, PM Phuc stated that the Government’s best efforts to combat the Covid-19 disease have been paying off and the outbreak is still under control.
“However, we cannot merely focus on fighting the disease, while neglecting other duties like ensuring national security and defense or social welfare,” he said.
Amid the unpredictable developments surrounding the outbreak, if Vietnam is to continue to work as normal, the country’s growth will certainly suffer, the Cabinet leader noted, calling for a “higher degree of efforts and more detailed and timely measures that can cope with the situation.”
He explained that there is no reason to revise the growth target and asked the Ministry of Planning and Investment to draw up plans to keep the rate at 6.8%, especially for the second half of the year.
He stressed that there are fights that should be waged on both fronts – against the Covid-19 and the “virus of stagnancy,” where using the disease as an excuse for inactivity could undermine efforts to overcome the worst effects of the disease.
Factories, supermarkets, tourist sites and national relic sites should still operate as usual, according to the PM.
He stated that measures should be adopted to address difficulties in all sectors from commerce to tourism or in import-export activities, underlining the need for more robust economic restructuring and for considering other options, such as using stimulus packages, accelerating disbursement and lowering interest rates and fees.
Necessities such as electricity, health, education and other public services will not be subject to any price increases for the moment, he stressed.
He added that prioritizing the domestic market and expanding imports and exports to other international markets will also be high on this year’s agenda.
Vietnam has so far reported 16 cases of infections, seven of which have been cleared of the virus and discharged from hospitals. The northern province of Vinh Phuc has been hit hardest with 11 infection cases. A local village of some 10,000 people was put into lockdown due to the cluster of cases there.
The northern neighbor China on Thursday reported 254 new deaths and a spike in the number of virus cases registered at 15,152. The total number of deaths from the outbreak stood at 1,367, with the total number of confirmed cases mounting to 59,804, according to an Associated Press report.