WHY IS VIETNAM’S ECONOMY SO RESILIENT DESPITE BEING SEVERELY AFFECTED BY THE COVID-19 PANDEMIC?

“Basically, Vietnam’s economy is in a stable position, and the growth momentum from previous years is quite high. On the other hand, development resources still have a lot of potential, and the government’s strong determination to reform the economy will help the ability to break through again when the epidemic is controlled is very high,” said Assoc. Prof. Dr. Dao Van Hung, Director of the Academy of Policy and Development.

Regarding the impact of the Covid-19 epidemic on Vietnam’s economy, Assoc. Prof. Dao Van Hung believes that Vietnam’s economic growth in 2020 will decrease compared to previous years but still have the ability to achieve a certain growth rate thanks to macroeconomic stability factors; the government’s efforts in implementing solutions to support the business sector, especially solutions to ensure social security. However, he noted that if the epidemic situation prolongs, the growth potential will decrease sharply compared to the beginning of the year’s expectations.

“Thus, economic growth will depend heavily on the results of controlling the epidemic at home and abroad. The biggest expectation is that Vietnam will soon control the epidemic in the second quarter of 2020.”

Regarding support policies for the economy and social security, Mr. Hung emphasized: “We cannot compare the size of support packages of countries with strong potential such as the United States and some European countries, however, Vietnam has responded quickly and promptly in supporting businesses and individuals affected by the Covid-19 epidemic such as workers, the poor, and policy beneficiaries. This creates confidence in the government’s management. This is an important factor for us to overcome the difficulties in the Covid-19 pandemic.”

These solutions can include reducing production and business costs for businesses through reducing electricity prices, reducing interest rates, debt rescheduling, and tax payment extensions for businesses. In addition, the Government needs to promote the implementation of key public investment projects, complete the disbursement plan for 2019 and 2020; continue to invest in urgent projects; simplify administrative procedures.

“During this time, the state budget needs to be rebalanced, when revenue is severely reduced, while spending is high. Therefore, the Government must cut spending in some unnecessary items, such as cutting regular spending from meetings, domestic and foreign work trips,” he said.

Although Vietnam’s economy is heavily affected by the Covid-19 epidemic, Mr. Hung believes that Vietnam’s ability to recover and achieve growth again is quite high for three reasons:

Firstly, thanks to the government’s efforts to control the epidemic and Vietnam has a large potential domestic market, with a scale of 100 million people.

Secondly, he said that basically, Vietnam’s economy is in a stable position, and the growth momentum from previous years is quite high. In addition, development resources still have a lot of potential, and the government’s strong determination to reform the economy.

Thirdly, the spirit of solidarity and sharing of the community to overcome the difficulties of the epidemic will continue to be promoted to restore and develop the economy.

“The Covid-19 epidemic, besides the negative impacts, also creates pressure to change development thinking, so Mr. Hung believes that we must continue to focus on restructuring the economy, innovating the growth model in the new context; managing macroeconomic policies more flexibly (public debt ceiling, inflation, budget deficit) in the context of both fighting the Covid-19 epidemic and developing the economy,”

Source: https://cafef.vn/