The Vietnam Institute for Economic and Policy Research (VEPR) estimated local GDP growth for this year at between 2.6 per cent and 2.8 per cent at a workshop yesterday in Hanoi, lower than the 3.8 per cent it forecast in July.
|Handsets are manufactured at a factory of Samsung Electronics Vietnam. Phones and components were still the items with the largest export value, reaching $36.78 billion, accounting for 18.16 per cent of total export turnover in nine months. VNA/VNS Photo Anh Tuan|
Pham The Anh, VEPR's chief economist, told the workshop, which said of the local macro-economic performance in the last quarter of 2020: “With an unfavourable scenario, the economy can grow only 1.8 or 2 per cent.”
Releasing the report on the first nine months of 2020, Anh said Vietnam's economic prospects depended on the ability to control the pandemic not only in the country but also around the world.
According to VEPR, factors that can support growth include the free trade agreement and investment protection agreement between Vietnam and the EU (EVFTA and IPA), disbursement and construction progress of key public investment projects.
Anh mentioned the positive conditions including low-cost raw materials due to decreased demand for consumption, the investment wave from the US-China trade war to Vietnam, a stable macro environment, as well as controlled inflation at an average level, adding they were creating good conditions for growth.
The report said Vietnam's trade surplus reached US$16.52 billion, a record in the past 15 years, thanks to strong exports, while imports decreased slightly. Specifically, the export turnover in nine months was estimated at $202.57 billion. Phones and components were still the items with the largest export value, reaching $36.78 billion, accounting for 18.16 per cent of total export turnover. Following were machines, equipment, tools and spare parts with $18.2 billion, up by 39.8 per cent. Import turnover was estimated at $186.5 billion in the period.
However, he stated Vietnam was still facing many risks and challenges in an uncertain economic environment, adding: “The pandemic resurgence in many countries was accompanied by blockade measures that could prolong supply chain failures while geopolitical conflicts between major countries can expose an open economy like Vietnam to unexpected risks.”
Internal risks such as a large fiscal imbalance, low speed and level of development investment, especially infrastructure and vulnerable health of the banking and financial system, the dependence on the FDI sector, low quality of labor, low efficiency of public investment and the delayed process of equitisation of State-owned enterprises were mentioned in the report.
Anh said: “The current forecast is lower than our estimate in our previous report due to the return of the pandemic in the central cities in July which disrupted the recovery of the tourism industry. Additionally, this includes a more unfavorable case when Vietnam's partner countries have to re-apply blockade measures.”
VEPR chief confirmed: "The top priority now is to ensure social security, to keep the macroeconomic environment stable, to reduce the burden on businesses having to suspend operations and support active businesses."
Anh said Vietnam must continue the support quickly to the right people, encourage to develop credit, give incentive policies, improve the institutional environment for groups of businesses and speed up public investment.
The report also suggested Vietnam diversify import/export markets to avoid relying heavily on a number of major economic partners, improve administrative procedures, the business environment, and build up a fiscal cushion to prevent shocks brought by a crisis like COVID-19. VNS
Economists have predicted that Vietnam’s GDP may be negative this year as the possibility of a second outbreak exists.
A low GDP growth rate is unavoidable in 2020 as the economy has been seriously affected by Covid-19.