Vietnam's economy will recover from the second quarter of 2021

Commenting on Vietnam's macroeconomy in 2020, Dr. Nguyen Xuan Thanh said that like many other economies, although Vietnam has controlled the Covid-19 epidemic well to a certain extent, this year the economy is bad. can be called the worst since the beginning of economic reform.

With the impact of the outbreak of infection in the community from the end of July, based on calculations on both the supply and demand sides, Mr. Thanh's assessment in 2020 that Vietnam's economic growth will be the most optimistic will be 2%.

This expert stated that until the outbreak of Covid-19 in July, the Government was confident to try to ensure growth of about 3-4%. But with difficulties due to this outbreak, growth in the third quarter may continue to be bad, efforts depend on the "nudge" from the disbursement of public investment capital, economic growth will be about 2%.

In the first 6 months of the year, looking at the supply side, service activities are declining, clearly showing the strongest impact of Covid-19 on the fields of tourism services, restaurants, hotels, etc transport. With real estate, there is a decline but not as much as the above fields.

On the demand side of the economy in 2020, although we have good control of Covid-19, domestic economic activities are not interrupted, but purchasing power is weak.

Mr. Thanh said that up to this point, it has only been affected by the 1st round of purchasing power in the market, that is, because of social distancing, people have not had the opportunity to shop since around March. In June 4 and 5, the epidemic returned to normal, but in July the epidemic returned. The third quarter will come to the 2nd round of impact on market purchasing power, which will pull down purchasing power.

In particular, from the third quarter, the market was also affected by the decrease in income. Over the past time, employees may be unemployed but still saving, but from September onwards, the impact of income reduction will really come.

"If the 1st round has pockets but people do not have the opportunity to shop because of social distancing, the 2nd round is the opportunity to shop but the pockets are low", TS. Nguyen Xuan Thanh assessed.

Vietnam is one of the few economies that still maintains export activities. Production, processing and manufacturing activities were not interrupted much. There are disruptions in the supply chain, but because of the economic recovery in China, the resumption of supply chains, industrial production still has a growth of about 5% thanks to exports.

In the first 6 months of the year, Vietnam's exports to the United States increased by nearly 15%, as of mid-August it was 16%. Strong exports to the United States are electronics, machinery, equipment, which are Chinese exports to the United States have decreased. Thanks to that compensation, Vietnam's exports did not decrease, exports in the first 6 months of the year increased by 0.2%, as of mid-August it was up 1.4%. Thus, the economy in 2020 is bad, but it is compensated when we maintain an important export market.

TS. Thanh said that despite being affected by Covid-19, macroeconomic stability has been maintained so far. Of course, bad debts have increased, credit growth has decreased even though the SBV has relaxed monetary policy; inflation, the general level of the price index does not increase. Recently, the dollar has fallen sharply against other major currencies in the world. The VND has so far been almost very stable compared to the USD, in the trend of USD falling in the past month, the VND has also risen in price.

"We expect a lot from the disbursement of public investment capital, in my assessment this is the State's policy priority at this time. In 2020, the bright spot is that investment from other sources will grow slowly, FDI will decrease, domestic private investment will increase by about 5%, the strongest point is that investment from the budget will increase by about 20%, partly so that GDP can increase by 2%", Mr. Thanh stated.

Mr. Thanh said that exports and public investment will compensate for the decline in people's consumption and the slow growth of private investment in 2020. On the basis of maintaining macroeconomic stability, with the Covid-19 situation under control, not disturbed in the supply chain, exports at least to China, the United States will grow well...

"My optimistic assessment is that the ability to recover the economy in Vietnam in 2021 is very high, from the second quarter of 2021, the economy recovers. Of course, with 2 conditions, 2 risks are well controlled, the first is that the Covid-19 pandemic is controlled, the vaccine has been available in Vietnam since mid-2021; Secondly, even though the high unemployment rate and high business bankruptcies lead to an increase in bad debts, the banking system is still standing," Mr. Thanh said.

According to Cafebiz / Huyen Tram