According to the latest macroeconomic report of the Institute for Economic and Policy Research (VEPR), as long as the Covid-19 epidemic continues to be controlled stably in the country and the world economy begins to flourish due to the Blockade measures are gradually removed, Vietnam’s economy could achieve growth in the range of 2.6 – 2.8% in the whole year 2020. In the more unfavorable case when the partner countries of Vietnam must Applying blockade measures, Vietnam’s economy can grow only between 1.8 and 2.0%.
VEPR forecasts that economic growth can still reach 2.8%.
Due to the Covid-19 epidemic, the world’s major economies were heavily affected, most of which had negative Q2 growth compared to the same period in 2019. The risk of a pandemic may break out strongly again in the season. Fall and winter cause many obstacles to production in the rest of 2020 or into 2021.
The European economies are facing serious problems related to rising unemployment and shrinking production. The entire Japanese economy slumped in the first nine months of the year after accumulated difficulties from the US-China trade war. China’s economy in the second quarter started to show recovery, while other countries in the BRICS and ASEAN-5 bloc recorded negative growth.
Vietnam’s economic prospects in 2020 depend on the ability to control epidemics not only domestically but also internationally. Factors that could support growth for the rest of the year include economic prospects due to the conclusion of the Free Trade Agreement and Investment Protection Agreement between Vietnam and the EU (EVFTA and EU). IPA) brings; The disbursement and construction progress of key public investment projects was accelerated as expected; raw material costs remain low due to reduced demand for consumption and production; the investment shifting wave to disperse risks from the US-China trade war and take advantage of investment incentives in Vietnam; macro environment is stable, inflation is controlled at a medium level, creating good conditions for the implementation of growth support policies.
However, Vietnam is also facing many risks and challenges in an uncertain world economic environment. Covid-19’s resurgence in many countries is accompanied by blockade measures that can prolong supply chain failures; Geopolitical conflicts between major countries can expose an open economy like Vietnam to unexpected risks.
Besides, the weakness of the Vietnamese economy also comes from internal risks such as a large fiscal imbalance, the speed and level of development investment, especially infrastructure, slowdown; the health of the banking – financial system has been gradually strengthened, but it is still vulnerable; the heavy dependence of growth on the FDI sector, lack of autonomy in technology and raw materials; low quality of labor; the efficiency of public investment is low and the harassment of the public apparatus is still heavy; The process of SOE equitization has stalled, and the environment and quality business institutions are low.
Taking into account the positive as well as negative factors affecting the current Vietnamese economy, the research team makes forecasts of growth under different scenarios of the disease prevention situation. As long as the Covid-19 epidemic continues to be controlled stably in the country and the world economy begins to flourish due to the removal of blockade measures, the Vietnamese economy can achieve growth in the range of 2. , 6-2.8% for the whole year 2020. This forecast is lower than the team’s estimate in the previous report, due to the resumption of disease in some major cities in Central Vietnam in the month. Seven interrupted the recovery of the tourism industry. In the more unfavorable case when Vietnam’s partner countries have to re-apply blockade measures, the Vietnamese economy may grow only between 1.8-2.0%.
Baseline scenario (high probability): In this scenario, the disease will not recur in the country for the remainder of the year and domestic economic activity will gradually return to normal. Meanwhile, epidemics in many important economic and financial centers in the world may reappear locally on a small scale in some countries.
Accordingly, the impact of Covid-19 on the agriculture, forestry, fishery, manufacturing and processing industries and services in the service sector will not be more serious than at present. Economic growth for the whole year is forecasted at 2.6-2.8%.
Unfavorable scenario (low probability): In this scenario, the disease in the country is still completely controlled for the rest of the year and economic activity gradually returns to normal. However, epidemics in many important economic-financial centers in the world reappeared strongly, and countries had to re-apply blockade measures in the fourth quarter of 2020, leading to Vietnam’s export and import severely affected and unlikely to recover in 2020, leading to a weak growth of domestic production and the ability to narrow the mining industry.
Accommodation and food services have no motivation to recover due to the lack of foreign tourists, while domestic demand for these types of services is also limited due to the poor economic situation affecting the micro-consumption. Economic growth for the whole year is forecasted at 1.8-2.0%.
With the second wave of Covid-19 resurging in Europe and North America, although it is uncertain whether strict blockade measures will be re-introduced in these countries, VEPR said. The approaching presidential election makes the whole US blockade as early as the year impossible.
In Europe, rising unemployment rates also make it very costly to close the economy. Therefore, the VEPR research team is still inclined to the more baseline scenario for Vietnam’s economic growth. The Vietnamese economy is more likely to achieve growth in the range of 2.6–2.8% in the whole 2020. Note that both scenarios above assume the epidemic is positively contained in in the country until the end of 2020. If the Covid-19 virus outbreak occurs in the country in the fourth quarter, efforts to promote growth will be severely affected.
Source: ndh.vn – Translated by fintel.vn
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