Illustrative image (Photo: Internet) Hanoi (VNA) - Vietnam’s economic growth rate is expected to slowsharply to 4.8 percent this year due to the impact of the COVID-19 pandemic,said a new Asian Development Bank (ADB) report released on April 3.
The report showed the country wouldsuffer an ongoing drop in demand from its principal trade and investmentpartners.
Economic growth decelerated to 3.8 percent inthe first quarter of 2020, compared to 6.8 percent in the same period lastyear. Travel and other restrictions imposed by the Government to slow thespread of the virus led to lower domestic consumption.Manufacturing weathered early headwinds but inputs, including those partof global value chains, are being depleted.
Growth in agriculture stagnated because oflower demand for agricultural exports and severe saline intrusion in the MekongDelta.
“Growth in services, the sector hardest hitby the pandemic, was halved to 3.2 percent in the first quarter of this year,down from 6.5 percent in the corresponding period in 2019,” said the report.
ADB experts said that to support economicactivitíes, in early March the Government unveiled a 10.8billion USD credit relief package of debtrestructuring and lowered interest rates and fees. The Government also launcheda fiscal package worth 1.3 billion USD thatreduces taxes and fees for affected firms and defers tax payment.
Meanwhile, the central bank cut policy ratesby 0.5-1 percent, lowered interest rate caps on VND deposits of less than sixmonths and on short-term VND lending to prioritised sectors.
According to ADB’s flagship annual economicpublication Asian Development Outlook 2020, the Vietnamese economy’sfundamentals remain resilient. If the pandemic is contained within the firsthalf of 2020, growth should rebound to 6.8 percent in 2021 - ADB’s pre-COVID-19forecast for Vietnam in 2020 - and remain strong over the medium and long-term.
“Despite the deceleration in economicactivity and the downside risks posed by the COVID-19 pandemic, Vietnam’seconomic growth is projected to remain one of the highest in Southeast Asia,”said ADB Country Director for Vietnam Eric Sidgwick.
Drivers of economic growth like the growingmiddle class and a dynamic private sector are still robust. The country’sbusiness environment continues to improve, while public spending to combat theimpact of the pandemic will likely be raised further.
The large number of bilateral andmultilateral trade agreements Vietnam participates in, which promise improvedmarket access, will help the country’s economic rebound. Vietnam would alsobenefit from the containment of the pandemic and eventual return of economicgrowth of China, which would help revive the global value chains./.
The report showed the country wouldsuffer an ongoing drop in demand from its principal trade and investmentpartners.
Economic growth decelerated to 3.8 percent inthe first quarter of 2020, compared to 6.8 percent in the same period lastyear. Travel and other restrictions imposed by the Government to slow thespread of the virus led to lower domestic consumption.Manufacturing weathered early headwinds but inputs, including those partof global value chains, are being depleted.
Growth in agriculture stagnated because oflower demand for agricultural exports and severe saline intrusion in the MekongDelta.
“Growth in services, the sector hardest hitby the pandemic, was halved to 3.2 percent in the first quarter of this year,down from 6.5 percent in the corresponding period in 2019,” said the report.
ADB experts said that to support economicactivitíes, in early March the Government unveiled a 10.8billion USD credit relief package of debtrestructuring and lowered interest rates and fees. The Government also launcheda fiscal package worth 1.3 billion USD thatreduces taxes and fees for affected firms and defers tax payment.
Meanwhile, the central bank cut policy ratesby 0.5-1 percent, lowered interest rate caps on VND deposits of less than sixmonths and on short-term VND lending to prioritised sectors.
According to ADB’s flagship annual economicpublication Asian Development Outlook 2020, the Vietnamese economy’sfundamentals remain resilient. If the pandemic is contained within the firsthalf of 2020, growth should rebound to 6.8 percent in 2021 - ADB’s pre-COVID-19forecast for Vietnam in 2020 - and remain strong over the medium and long-term.
“Despite the deceleration in economicactivity and the downside risks posed by the COVID-19 pandemic, Vietnam’seconomic growth is projected to remain one of the highest in Southeast Asia,”said ADB Country Director for Vietnam Eric Sidgwick.
Drivers of economic growth like the growingmiddle class and a dynamic private sector are still robust. The country’sbusiness environment continues to improve, while public spending to combat theimpact of the pandemic will likely be raised further.
The large number of bilateral andmultilateral trade agreements Vietnam participates in, which promise improvedmarket access, will help the country’s economic rebound. Vietnam would alsobenefit from the containment of the pandemic and eventual return of economicgrowth of China, which would help revive the global value chains./.
VNA
