Illustrative image (Photo: VNA) Hanoi (VNS/VNA) -A looser monetary policy should be instituted to support economic growth in thewake of global volatilities, especially the outbreak of the novel coronavirus(nCoV), experts suggested.
Banking and finance expert Nguyen Tri Hieu said that Vietnam has so far seeninitial damage from the virus, with business and production declining in manyindustries, especially agriculture, retail, tourism and transport.
The Ministry of Planning and Investment has so far also estimated the country’sGDP growth rate would be at 6.27 percent in 2020, 0.53 percentage points lowerthan the target set by the Government in its Resolution No 1 if the epidemic iscontrolled promptly in the first quarter of this year.
GDP growth would be at only 6.09 percent, 0.71 percentage points lower than thetarget if the epidemic is controlled in the second quarter.
Besides the epidemic, according to Hieu, difficulties caused by the US-Chinatrade war, Brexit, and political and military crisis in the Middle East wouldalso have significant adverse impacts on the Vietnamese economy.
“The Vietnamese economy this year is facing more challenges than last year, soa loose monetary policy is needed,” Hieu said, proposing interest rate cuts andstimulus packages for some affected industries.
Sharing the same view, experts from Bao Viet Securities Company said that thenew strain of coronavirus is impacting almost every aspect of theVietnamese economy.
“An economic slowdown in the second half of the first quarter due to the virusmay be the motivation for a looser monetary policy from the central bank,” theexperts predicted.
Central banks in many Asian countries have so far also loosened monetarypolicies to support their economies.
Late last week, the Philippines was the latest country, following China, theRepublic of Korea (RoK), Thailand and Singapore, to cut the key reverse reporate by 25 basis points to 3.75 percent, aiming to support growth.
The Vietnamese central bank has so far asked commercial banks to implementcredit measures to support affected firms and individuals, includingrescheduling debt payments and reducing lending interest rates.
The State Bank of Vietnam said that it was willing to support the liquidity ofcommercial banks, noting that if necessary, it would also adjust interest ratepolicy, thereby indirectly supporting commercial banks to reduce interest ratesand support businesses.
Seeing downside risks to Asia’s growth outlook due to the nCoV outbreak inChina and forecasting the region's growth to slow to 4.0 percent from 4.3percent in 2019 if China’s economy were to slow to 5.4 percent this year from6.1 percent last year, analysts from Fitch Solutions also highlighted that somecountries have more policy space to support their economies and thereby cushionthe negative impact of the epidemic. However, it remains concerned about thoseeconomies with weaker healthcare systems and macroeconomic fundamentals.
“We note that while downside risks are exacerbated, several countries,particularly those with high savings rates and fiscal capacity, have alreadyannounced mitigating measures to cushion the blow," Fitch analysts said.
Fitch took Thailand and the RoKas examples. The Thai government has announced a potential stimulus packagetargeted at supporting consumers and the travel sector. This package would bein addition to the planned fiscal stimulus via the still to be passed 2020budget and a tax package aimed at encouraging investment approved by thecabinet recently.
The RoK government meanwhile has announced that it will use up to 20.8 billionwon to offset the slowing impact of the coronavirus outbreak.
“As we have highlighted, while some economies will be able to take quickmitigating measures, others may struggle more over the forthcoming months,”Fitch noted./.
Banking and finance expert Nguyen Tri Hieu said that Vietnam has so far seeninitial damage from the virus, with business and production declining in manyindustries, especially agriculture, retail, tourism and transport.
The Ministry of Planning and Investment has so far also estimated the country’sGDP growth rate would be at 6.27 percent in 2020, 0.53 percentage points lowerthan the target set by the Government in its Resolution No 1 if the epidemic iscontrolled promptly in the first quarter of this year.
GDP growth would be at only 6.09 percent, 0.71 percentage points lower than thetarget if the epidemic is controlled in the second quarter.
Besides the epidemic, according to Hieu, difficulties caused by the US-Chinatrade war, Brexit, and political and military crisis in the Middle East wouldalso have significant adverse impacts on the Vietnamese economy.
“The Vietnamese economy this year is facing more challenges than last year, soa loose monetary policy is needed,” Hieu said, proposing interest rate cuts andstimulus packages for some affected industries.
Sharing the same view, experts from Bao Viet Securities Company said that thenew strain of coronavirus is impacting almost every aspect of theVietnamese economy.
“An economic slowdown in the second half of the first quarter due to the virusmay be the motivation for a looser monetary policy from the central bank,” theexperts predicted.
Central banks in many Asian countries have so far also loosened monetarypolicies to support their economies.
Late last week, the Philippines was the latest country, following China, theRepublic of Korea (RoK), Thailand and Singapore, to cut the key reverse reporate by 25 basis points to 3.75 percent, aiming to support growth.
The Vietnamese central bank has so far asked commercial banks to implementcredit measures to support affected firms and individuals, includingrescheduling debt payments and reducing lending interest rates.
The State Bank of Vietnam said that it was willing to support the liquidity ofcommercial banks, noting that if necessary, it would also adjust interest ratepolicy, thereby indirectly supporting commercial banks to reduce interest ratesand support businesses.
Seeing downside risks to Asia’s growth outlook due to the nCoV outbreak inChina and forecasting the region's growth to slow to 4.0 percent from 4.3percent in 2019 if China’s economy were to slow to 5.4 percent this year from6.1 percent last year, analysts from Fitch Solutions also highlighted that somecountries have more policy space to support their economies and thereby cushionthe negative impact of the epidemic. However, it remains concerned about thoseeconomies with weaker healthcare systems and macroeconomic fundamentals.
“We note that while downside risks are exacerbated, several countries,particularly those with high savings rates and fiscal capacity, have alreadyannounced mitigating measures to cushion the blow," Fitch analysts said.
Fitch took Thailand and the RoKas examples. The Thai government has announced a potential stimulus packagetargeted at supporting consumers and the travel sector. This package would bein addition to the planned fiscal stimulus via the still to be passed 2020budget and a tax package aimed at encouraging investment approved by thecabinet recently.
The RoK government meanwhile has announced that it will use up to 20.8 billionwon to offset the slowing impact of the coronavirus outbreak.
“As we have highlighted, while some economies will be able to take quickmitigating measures, others may struggle more over the forthcoming months,”Fitch noted./.
VNA
