Projected gdp growth

Hanoi and Ho Chi Minh City are urged to remain alert in the Covid-19 fight, including tight control over people entering Vietnam.

The Vietnamese government has urged local authorities to continue pursuing the dual target of containing the pandemic and boosting economic growth in the final months of the year, aiming to realize the GDP growth target of 2.5 – 3% for 2020.

Vietnam targets GDP growth of 2.5 – 3% for this year. Photo: Chien Cong.

Meanwhile, the country’s two biggest cities Hanoi and Ho Chi Minh City are requested to stay alert in the Covid-19 fight, including tighting control over people entering Vietnam and the enforcement of face mask wearing rule in public places, stated a resolution recently released by the government following its monthly meeting on October 30.

The Ministry of Planning and Investment is tasked with cooperating with related ministries and agencies in accelerating the disbursement of public funds, including official development assistance (ODA) and preferential loans.

Additionally, more efforts are needed to promote private investment and new business models.

The State Bank of Vietnam (SBV), the country’s central bank, would continue to manage monetary policy in a flexible manner to stabilize macro-economic environment and support economic growth.

The resolution urged the SBV to ensure sufficient credit support for the economy while guaranteeing credit quality and pushing for non-cash payment.

Focusing on trade

The Ministry of Industry and Trade (MoIT) is in charge of working with related agencies and localities in resuming supply chains, as well as the development of the logistics sector and supporting industries.

The MoIT should support local enterprises in taking advantage of free trade agreements, especially the CPTPP and EVFTA, to penetrate new export markets.

For the rest of the year, the MoIT is responsible for promoting domestic consumption and ensuring efficient functioning of distribution channels related to the “Vietnamese prefer Vietnamese goods” campaign, along with a focus on e-commerce development.

The Ministry of Transport is requested to speed up the pace of upgrading projects at Noi Bai and Tan Son Nhat airports, and soon start the construction of Long Thanh International Airport.

The Ministry of Labor, War Invalids and Social Affairs should continue to carry out efficiently the instruction of Prime Minister Nguyen Xuan Phuc on providing support for the people and enterprises affected by the Covid-19 pandemic.

The Ministry of Information and Communications is set to step up efforts in developing e-government and upgrading digital infrastructure to prepare for the nationwide implementation of 5G network.

This year, the International Monetary Fund (IMF) predicted Vietnam to remain the only economy in the Southeast Asian region to register positive growth of 1.6%, taking the country’s economic size to US$340.6 billion and leapfrogging Singapore to be the fourth largest economy in the region.

The World Bank and Standard Chartered have released forecast for Vietnam’s economic growth similar to that of the government, which is in range of 2.5 – 3% in this year.

Vietnam could pay a costly price if the government decides to end anti-virus measures prematurely to save a few percentage points of GDP growth, said an expert.

Maintaining a positive GDP growth rate should not be Vietnam’s priority at this moment, as the ultimate goal is to protect the well-being of key economic components, including the people, enterprises, the banking – finance system and public trust, said Vu Thanh Tu Anh, dean of Fulbright School of Public Policy Management, Fulbright University Vietnam.

Vu Thanh Tu Anh, director of the Fulbright Economics Teaching Program. Source: Fulbright.

All these factors would help lay the foundation for Vietnam to recover from the current crisis, Anh said at an online conference on April 6.

With a small-sized economy and a high level of economic openness, it is not a surprise that Vietnam is highly susceptible to external shocks.

Moreover, the lack of development of supporting industries forced the domestic manufacturing and processing to source input materials from abroad, Anh said, adding when the pandemic causes a disruption to global supply chains, the majority of manufacturers are struggling with shortage of materials.

Data: GSO. Chart: Nguyen Tung.

In addition to a 10-year low GDP growth of 3.82% in the first quarter, both industrial production and retail consumption suffered a plunge in growth.

Export growth recorded the all-time low of 0.5%, while import reverted to a contraction of nearly 2%, indicating companies are left with depleted input materials.

Anh predicted export growth in the second quarter may even lower when the world’s major economies, Vietnam’s key export markets, feel deeper impacts of the pandemic.

Data: National Economics University – Hanoi. Chart: Nguyen Tung.

“Without timely and effective intervention from the government, some economic sectors and enterprises may collapse, resulting in severe consequences for growth, jobs and social issues,” Anh warned.

During this context, Anh urged the government to mobilize all resources to prevent the  health crisis from turning into an economic crisis. In that case, an economic recession is inevitable, Anh added.

Vietnam could pay a costly price if the government decides to end anti-virus measures prematurely to save a few percentage points of GDP growth, Anh urged.

Public trust is key in every move

Anh recommended current supporting policies should take into consideration long-term benefits, which could ensure a speedy recovery and healthy development of the economy in the post-pandemic period.

In terms of fiscal policies, Anh said the government should prioritize public spending on healthcare and the fight against the pandemic, as failure in this aspect could no doubt lead to an economic shock.

Anh urged more government spending on social welfare and essential services to ensure social stability, particularly as the poor and near-poor are highly dependence on such support.

Meanwhile, it is essential to support liquidity for commercial banks, which in turn are providing support for enterprises hurt by the pandemic.

Anh noted Vietnam could be more flexible in managing the exchange rate policy in a move to maintain export advantages, like other countries have done.

While the government should allocate a part of state capital for developing a Covid-19 vaccine, instead of waiting for others, public investment policies should aim at a dual target of stimulating the economy and nurturing recovery capability.

Fields such as IT, renewable energy, major infrastructure development projects, e-payment, and e-commerce should be of government priorities.

Anh, however, said public trust is of utmost importance in every government’s moves and play a key part for the success of macro policies.

One of the top priorities of the government is to prove that the government has acted appropriately and timely for the benefits of the people and enterprises.

With that in mind, once this crisis ends, the government could expect greater effects in any future policies, Anh concluded.

Bangkok (VNA) – The Bank of Thailand has slashed its economic growth forecast this year to 3 percent from 3.2 percent made in December, given the impact of the second wave of COVID-19 infections and tepid tourism.

Titanun Mallikamas, secretary of the central bank’s Monetary Policy Committee (MPC), said the second wave of infections that emerged in December resulted in a sharp drop in foreign tourist arrivals. The bank trimmed its projection for foreign arrivals this year to only 3 million from 5.5 million.

Last year, Thailand received 6.7 million foreign tourist arrivals and earned around 300 billion baht (9.66 billion USD) in tourism revenue. The figures are far below 40 million tourist arrivals and 2 trillion baht reported in 2019.

With tourism contributing up to 12 percent of GDP, Thailand’s economic recovery is on a slower pace than other countries that rely less on tourism, he said.

A significant decline in overseas travellers is expected to take a heavy toll on GDP in the first quarter this year, said Titanun.

In 2020, Thailand ’s economy shrank 6.1 percent, compared with growth of 2.3 percent in 2019. Last year’s 6.1 percent contraction was the worst full-year performance in 22 years since the 7.6 percent decline in 1998 as a result of the Asian financial crisis.

The Bank of Thailand forecasts the economy will take around 2.5 years to recover to the same level as before the pandemic.

Despite the downgrade on growth this year, the central bank predicted the Thai economy would expand by 4.7 percent in 2022, mainly supported by a fast recovery in merchandise exports, in line with the expansion of trading partner economies as well as stimulus measures recently announced.

Amid the global economic recovery, the Bank of Thailand upgraded its export growth outlook to 10 percent this year from 5.7 percent earlier. The improving economic momentum of trading partners is the key factor supporting export growth, Titanun said.

He said the MPC on March 24 voted unanimously to maintain the policy rate at 0.5 percent for a seventh straight meeting, aiming to support an economic recovery that remains highly uncertain./.

VNA

The economy is subject to a strong rebound of 7% GDP growth in 2021.

Vietnam’s GDP growth is forecast to decelerate to a new low of 2.7% in 2020, but would remain ahead of regional peers, according to the International Monetary Fund (IMF)’s latest update in its World Economic Outlook in April.

The country’s consumer price index is set to hit 3.2%, lower than the 4% growth target this year. Its economy could be subject to a strong rebound of 7% GDP growth rate in 2021, the report stated.

Such growth would place Vietnam ahead of neighboring countries such as the Philippines and Indonesia with modest growth rates of 0.6% and 0.5%, respectively. Others like Thailand and Malaysia are bracing for contraction.

Regarding major global economies, the IMF expected the US economy to shrink 5.9%, the worst since 1946. China is projected to grow 1.2%, the lowest in 44 years, and Japan’s contraction could be 5.2%, the lowest in 11 years.

The outlook is even more gloomy for European countries, as Italy is subject to the deepest contraction of 9.1%, followed by Germany with 7% and Britain with 6.5%.

Meanwhile, IMF’s April World Economic Outlook projected global growth in 2020 to fall to 3%, a significant downgrade of 6.3 percentage points from January 2020, making this current Covid-19 crisis “the worst recession since the Great Depression, and far worse than the Global Financial Crisis,” stressed Gita Gopinath, IMF Economic Counsellor.

For the first time since the Great Depression both advanced economies and emerging market and developing economies are in recession, Gopinath added.

Growth in advanced economies is projected at -6.1% this year. Emerging market and developing economies with normal growth levels well above advanced economies are also projected to have negative growth rate of -1% in 2020.

Assuming the pandemic fades in the second half of 2020 and that policy actions taken around the world are effective in preventing widespread firm bankruptcies, extended job losses, and system-wide financial strains, the IMF projected global growth in 2021 to rebound to 5.8%.

The Asian region would serve as a driving force for global economic recovery in 2021 with China coming strong at a 9.2% GDP growth rate, India with 7.4% and the ASEAN–5 (Indonesia, Malaysia, the Philippines, Thailand and Vietnam) recording an average growth rate of 7.8%.

Global uncertainties are forcing financial centers around the world to redefine their activities, as such, Vietnam should grasp this opportunity to build a continental-level finance center to attract investment capital.

Investment from Las Vegas-based casino and resort group Global Gaming Asset Management (GGAM) is estimated to boost Vietnam’s GDP growth by 2%.

President of the Imex Pan Pacific Group (IPPG) Jonathan Hanh Nguyen at the meeting. Photo: Quang Hai

“A casino project financed by the late Founder and CEO of Las Vegas Sands Corporation Sheldon Adelson in Singapore helped the country GDP to expand by an additional of 1.8%. So there are major advantages for tourism and economic development.”

President of the Imex Pan Pacific Group (IPPG) Jonathan Hanh Nguyen gave the assessments as saying he is in partnership with some US businesspeople, who are specialized in the fields of finance, casino and financial legal regulations, during a press conference on March 29 announcing the master planning for Danang until 2030, with vision to 2045.

“CEO of GGAM William Weidner is calling for investment funds for casino projects in Asia. In Vietnam, the US corporation is seeking authority’s permission for the investment in a financial center and a resort complex in Danang,” he added.

“We have been planning for a financial center in Vietnam over the past five years. My friends are placing their trust on me and Vietnam,” Hanh Nguyen said.

Hanh Nguyen, William Weidner and Paul Steelman, CEO of Steelman Partners, put forth the idea of a Singaporean-style financial center integrated with a resort complex in Danang.

Danang targets to become one of Asian financial hub. Photo: Duy Anh

The three expected the building would have the best quality in the world and totally transform investment and tourism landscapes in Vietnam.

According to Hanh Nguyen, global uncertainties are forcing financial centers around the world to redefine their activities.

In this regard, “Vietnam and Danang in particular should grasp this opportunity to build a continental-level financial center to attract investment capital inflow,” Hanh Nguyen suggested.

Hanh Nguyen expected the upcoming financial center should be the focal point to attract funds from billionaires and multinationals, in turn laying the foundation for further investment activities from smaller investors.

On the same day, Danang People’s Committee signed a financing agreement with the IPPG for the study project of turning the city into an Asian finance hub.