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Early this week authorities will officially release critically-important GDP figures for the second quarter and the first half of 2020 _ a relatively positive rate amid many economies suffering below-zero growth. However, Deputy Prime Minister Pham Binh Minh said that the economy grew by about 3 per cent in the first half of 2020. Also, several high-profile international organisations has demonstrated their continued optimism about the Vietnamese economic outlook this year, which is expected to stay on top of the ASEAN region.
At last week’s meeting with Prime Minister Nguyen Xuan Phuc, Asian Development Bank (ADB) country director for Vietnam, Eric Sidgwick, stated that Vietnam has made a spectacular achievement in fighting COVID-19, making it more convenient for it to attract more investment and expand local production.
“Though being a developing nation facing numerous difficulties, Vietnam has become a role model for the whole world in effectively fighting against the pandemic. This will lay firm groundwork for Vietnam to win bigger confidence of international investors, and to grow 4.1 per cent this year, a very good growth level in the existing context of COVID-19, and the fastest growth expected in Southeast Asia (see chart),” Sidgwick said. “However, it is likely that the rate will be higher.”
According to the ADB, damage caused by COVID-19 to the Vietnamese economy will likely be between $675 million and $3.7 billion in 2020, depending on the level of the pandemic’s expansion, equivalent to 0.3-1.4 per cent of GDP. “Growth in Vietnam decelerated to 3.8 per cent on-year in the first quarter of 2020 but regained some strength in May since the lifting of social distancing in mid-April,” the bank stated in its fresh supplement to its annual flagship economic publication, the Asian Development Outlook enacted in April. “Growth is expected to bounce back to 6.8 per cent in 2021.”
Also meeting with PM Phuc last week, Ousmane Dione, the World Bank’s country director for Vietnam, stated that Vietnam has been quite successful in controlling COVID-19, and “has become a role model” in this regard.
“Vietnam’s health response to the COVID-19 pandemic has been exceptional. With strong leadership and a proactive response, Vietnam has not only managed to flatten the curve, but also contained the number of infections,” Dione said.
“According to our most recent regional economic update, Vietnam’s economy has been resilient. In sharp contrast with the trends observed around the world, many businesses in Vietnam have increased their sales abroad, while potential investors are still coming in large numbers,” he added. “Nearly $14 billion in foreign direct investment was registered in the first five months of this year, and the figure is expected to continue rising in the coming months.”
The World Bank has advanced forecasts for baseline growth for many regional nations, with Vietnam sitting on top at 4 per cent, and Cambodia’s growth rate being 2.5 per cent, the Philippines 3 per cent, Indonesia 2 per cent, Laos 3.6 per cent, Malaysia -0.1 per cent, Myanmar 3 per cent, and Thailand -3 per cent. Baseline growth refers to a scenario of severe growth slowdown followed by a strong recovery.
“Thanks to its strong fundamentals, and assuming the relative control of the COVID-19 pandemic both in Vietnam and in the world, the Vietnamese economy should rebound in 2021,” the World Bank said in a statement.
Global rating firm Fitch Ratings has revised the outlook on Vietnam to Stable, from Positive, and has affirmed the rating at ‘BB’. The outlook revision reflects the impact of the escalating COVID-19 pandemic on Vietnam’s economy through its tourism and export sectors, and weakening domestic demand. The outlook has confirmed Vietnam’s strong medium-term growth prospects based on its record of macro-economic stability, low government debt levels, and resilient external sector, including relatively large foreign exchange reserves.
Recently the International Monetary Fund (IMF) forecasted that Vietnam will achieve the fastest growth of 2.7 per cent this year in the ASEAN, before bouncing back to 7 per cent in 2021.
However, PM Phuc underlined that Vietnam is determined to achieve an economic growth rate higher than the IMF’s forecast to reach the highest rate in Southeast Asia, via a programme of rebooting the economy, with local production revived.
The National Assembly has also decided not to revise the country’s economic growth target of 6.8 per cent for 2020, stressing that “the whole country will make greatest efforts to weather all difficulties to maximise the accomplishment of all the targets including the growth goal”
“The government will take the initiative in monitoring policies to secure macro-economic stability, control inflation, ensure big economic balances, social security, livelihood, employment, and support the poor,” PM Phuc stated. “The government will also monitor and adjust budget targets in a manner suitable to the reality, and all efforts must be made to maximise the accomplishment of socio-economic development targets for 2020.”