Vietnam’s growth remains among fastest in Asia despite coronavirus impacts

Friday, 2020-04-03 10:31:46
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Vietnam's economic growth is expected to rebound to 6.8% in 2021.
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NDO - Vietnam’s economic growth is expected to slow to 4.8% in 2020 due to the coronavirus (Covid-19) pandemic but remains one of the highest in Asia, according to projections by the Asian Development Bank (ADB).

In its latest report, the ADB said that the slowdown in the Vietnamese economy was due to the initial supply shock to economic activity from the outbreak and the subsequent and ongoing drop in demand from Vietnam’s main trading partners.

Earlier this week, the World Bank forecast that Vietnam’s growth will decline to 4.9% this year.

The General Statistics Office announced last month that the economy has expanded by 3.82% in the first quarter of 2020, compared with 6.8% in the corresponding period in 2019.

According to the ADB, Vietnam’s growth could rebound to 6.8% in 2021 if the pandemic is contained in the first half of 2020, while the World Bank’s prediction for Vietnam in 2021 is 7.5%.

The ADB stated that the large number of bilateral and multilateral trade agreements that Vietnam participates in, which promise improved market access, will help the country’s economic rebound.

The country would also benefit from the containment of the Covid-19 pandemic and eventual return of economic growth in China, which would help revive the global value chains.

Vietnam’s drivers of growth, the growing middle-income class and a dynamic private sector, remain robust, noted the ADB.

It added that the country’s business environment continues to improve and public spending to combat the impact of the coronavirus, which rose significantly in January and February, will likely rise further.

In early March, the Vietnamese government unveiled a US$10.8 billion credit relief package featuring debt restructuring and lowered interest rates and fees to support economic activity.

The government also launched a fiscal package worth US$1.3 billion that reduces taxes and fees for affected firms and defers tax payments.

The central bank, for its part, cut policy rates by 0.5-1 percentage point, lowered interest rate caps on dong deposits of less than 6 months and on short-term dong lending to prioritised sectors.