Nation’s economy not in safe haven just yet
The unpredictable aftermath of the global health crisis affecting the entire economy has prompted the government to pursue lower-than-planned economic growth for this year, featured by slackness in exports and production.
The Ministry of Planning and Investment (MPI) is to formulate a new scenario for economic growth for the third and fourth quarters of the year, with a new economic growth rate of 3-4 per cent this year with maximum efforts to be made to reach it. The world’s situation is continuing to worsen in a quick and complicated manner as the pandemic rages in many nations.
In May, the government announced two scenarios, with the first expected to see the economy increase 4.4-5.2 per cent this year, and the second forecast to see the economy climb 3.6-4.4 per cent for 2020.
Late last year, the National Assembly set a target of 6.8 per cent growth for this year. At that time, the economy was flourishing, with local and global conditions quite favourable for boosting production and exports.
“However, the pandemic remains extremely complicated and unpredictable, and Vietnam is yet to be able to open its doors to nations. The outlook for global economic recovery is very difficult, largely depending on abilities to successfully produce a vaccine and COVID-19 remedies,” stated MPI Minister Nguyen Chi Dung.
“If the pandemic resurges domestically, the aftermath will be very heavy, with many businesses continuing to halt operation, disband, or go bust. This will torpedo the country’s development achievements reaped over the past years, and it will take so many years and much money to recover the economy, meaning we will miss many opportunities for national development.”
According to the MPI’s National Centre for Socio-economic Information and Forecast, the world’s economic growth is expected to decline by 2 per cent in the third quarter of 2020, and bounce back to 1.2 per cent in the fourth quarter.
Also, in the third and fourth quarters, Vietnam’s key trade partners are predicted to see a dent in growth, such as the US (-4.2 and -0.93 per cent), Japan (-5.6 and -1.32 per cent), Europe (-5.7 and -2.85 per cent), and South Korea (-1.9 and -1.38 per cent).
The MPI reported that in the first half of the year, Vietnam’s export turnover from the US was $30.3 billion, up 10.3 per cent on-year, followed by Europe ($16.1 billion, down 8.8 per cent on-year, Japan ($9.4 billion, down 2.3 per cent on-year), and South Korea ($9.3 billion, up 2.3 per cent).
“If their economies suffered from below-zero growth from now till the year’s end, Vietnam’s economy will continue being seriously affected,” an expert from the centre told VIR.
The centre projected that the Vietnamese economy may grow 4.5 per cent this year, with the on-year growth rate to be 2.55 per cent for the agro-forestry-fishery sector, 6.57 per cent for the industrial-construction, and 3.26 per cent for the service sector.
The MPI reported that domestic production, and industrial production in particular, have gradually bounced back since May, after a first-four-month decline caused by the aftermath of the health crisis. The index for industrial production climbed 11.2 per cent on-year in May and 10.3 per cent on-year in June, and 2.71 per cent on-year in the first six months, in which the manufacturing and processing sector expanded 4.96 per cent, electricity production and distribution grew 3.04 per cent, and wastewater treatment activities ascended 3.76 per cent.