A farmer in the nothern province of Hai Duong's Thanh Ha district harvests lychee. (Photo: VNA) Hanoi (VNS/VNA) – Vietnam’s economic growth rate this year would reach3.8 percent if there is no second COVID-19 outbreak in the second half of theyear and economic activities gradually resume, the Vietnam Institute forEconomic and Policy Research (VERP) has predicted.
The forecastwas released at the launch of an independent assessment of Vietnam’smacroeconomic performance by VERP held in Hanoi on July 21.
“Itis likely that the economy will reach 3.8 percent for the whole year 2020. At alower probability, the economy may grow only 2.2 percent due to adverse developmentsof the COVID-19 pandemic,” said Pham The Anh, chief economist at VERP, addingthat the optimistic scenario of 5 percent is unlikely.
Consideringthe factors affecting the Vietnamese economy, VERP provided two scenarios forthe economy. In the first scenario, the pandemic in many important economic andfinancial centres around the world is assumed capable of a recurrence, or notconfident enough that countries must extend lockdowns to the second half of thethird quarter. This would affect demand for importing goods from Vietnam and aswell as for tourism and accommodation in the country.
Accordingly,the impact of COVID-19 on agriculture, forestry and fisheries, manufacturingand processing and services would be more serious. In general, growth inindustries would be modest, in which the most affected sectors includeaccommodation, catering, mining and real estate.
Inanother scenario, the institute forecast the domestic pandemic would becontrolled for the rest of the year and economic activities gradually return tonormal.
However,if COVID-19 in major economic and financial centres in the world recursstrongly, countries may have to extend lockdown until the fourth quarter of2020. As a result, Vietnam's import and export activities would be seriouslyaffected and not be able to recover in 2020, leading to weak growth of domesticproduction.
Atthe same time, accommodation and catering services have no momentum to recoverdue to a lack of foreign tourists, while domestic demand forthese services is also limited due to the poor economic situation, leadingto a GDP growth forecast of 2.2 percent.
Vietnamis one of few countries to have achieved positive economic growth in the secondquarter of 2020, reaching 0.36 percent. For the first six months of the year,GDP increased by 1.81 percent.
Inthe difficult context, agriculture has been a highlight of the economy inthe first half of the year, contributing 12 percent to the overall growth,double the same period last year.
Inaddition, the second contributor was manufacturing and processing, whichcontributed about 5 percent of overall growth. This was partly due topublic investment and construction activities still occurred in the process ofsocial distance.
VEPRexperts said that Vietnam's economic prospects in 2020 would depend on theability to control the disease, not only domestically but also in the world.
Theysaid factors that support the growth in the second half of the year includedexpectations on economic prospects due to the signing of the European Union-VietnamFree Trade Agreement (EVFTA), disbursement progress of public investmentprojects, investment waves into Vietnam and a stable macroeconomy.
However,Vietnam had been also facing many challenges in the unstable worldeconomic environment and uncertain future. The recurrence of COVID-19 in manycountries was accompanied by lockdown measures, making for a lengthier break ofthe supply chain, while geopolitical conflicts among large countries couldmake an open economy like Vietnam face unexpected risks.
Inaddition, the weakness of Vietnam's economy also came from internal risks suchas large fiscal imbalance, the speed and level of development investmentand infrastructure building slowdown. Although the health of the banking andfinancial system had been gradually strengthened, it was still vulnerable,according to the experts. The economy was much dependent on growthof the FDI sector and the lack of technological and raw material autonomy.
CanVan Luc, a financial expert, agreed with VEPR's opinion.
“Iguarantee inflation will be below 4 percent," he said, giving the mainreason that current demand is very weak./.
VNA
