Ho Chi Minh City, the southern economic hub of Vietnam (Photo: VNA) Hanoi (VNA) – While Vietnam remains significantlyexposed to the COVID-19 outbreak and the ongoing turbulence in the globalfinancial markets, its economy stays resilient to external shocks in the firstfew months of 2020, according to the World Bank (WB).
In its East Asia and Pacific Economic UpdateApril 2020, the WB said on the upside, Vietnam is strongly positioned tobenefit from numerous free trade agreements that are coming into force over theforecast period.
In the first two months, its exports haveexpanded by 8 percent, FDI inflows amounted to 2.5 billion USD and retail saleswere up by 5.4 percent, the bank said, noting that while prospects remainfavourable for the Vietnamese economy in the medium term, GDP growth will beaffected negatively by the recent coronavirus outbreak, now a global pandemic.
The WB cited preliminary estimates as suggestingthat the rate of expansion of the economy could decline to about 4.9 percent in2020.
The most important negative impacts associatedto the outbreak are on tourism and on manufacturing due to supply chaindisruptions. Inflationary pressures are projected to increasetemporarily.
With many households now wage dependent even inrural areas, a slowdown in tourism, hotels, and catering as well asmanufacturing sectors could temporarily increase poverty during the first halfof 2020, the WB predicted.
According to the report, the fiscal deficit willtemporary increase in 2020 due to lower revenue and the fiscal stimulus thatwill partially compensate for the negative effect of the global pandemic on theVietnamese economy.
Over the medium term, growth is projected torebound back to 7.5 percent in 2021 and converge at around 6.5 percent in 2022,reflecting an improved external demand and a firming of the services sector, aswell as a gradual recovery in agricultural production, the WB added.
It also suggested Vietnam manage external risksby diversifying its trade flows, improving its competitiveness and adhering tonew trade agreements./.
VNA
