The successful response, prevention and control of the Covid-19 epidemic is an important factor that will play a decisive role in macroeconomic stability and economic recovery in the last months of the year.
Flexible and creative management
Two waves of the COVID-19 epidemic have reduced the country’s GDP growth in the first six months of 2021 from 6.22% as planned for in the operating scenario to about 5.8%. According to the Ministry of Planning and (MPI), the target of 6.5% growth for the whole year has become extremely challenging as the prospect of economic growth in the last months of the year still facesmany risk factors. The remaining two quarters of the year must reach a growth rate of more than 7% in order to achieve the full-year growth target.
Assessing the impact of the fourth wave of the COVID-19 epidemic on the socio-economic situation, Dr. Can Van Luc and a research team from the Bank for Investment and Development of Vietnam (BIDV) said that there will be a very strong impact on the economy in many aspects such as: supply chain, consumption, import and export, employment, bad debt, budget revenue. GDP growth will slow down, to about 5.5% - 5.8% in the second quarter and about 5% for the first six months.
In the last months of the year, growth will recover again, whole year growth is expected to reach 6.1% - 6.3%. According to Dr. Can Van Luc, this is a lower growth rate than expected, because this outbreak has had a direct impact on production areas such as Bac Giang and Bac Ninh, these two localities accounting for about 10% of industrial production and 15% of the total export revenue of the whole country.
Notably, the fourth outbreak of the epidemic is the most dangerous ever, requiring the Government's executive response to soon adapt as many previous anti-epidemic experiences are no longer relevant. The strategy of epidemic prevention and control has been switched from defence to active attack, to avoid disrupting production and minimise the impact of the epidemic on socio-economic life.
According to Dr. Nguyen Duc Kien, Head of the Prime Minister’s Economic Advisory Group, the Government’s point of view is that each locality should base their approach on the actual situation to have solutions to successfully implement the “dual goals”, then study and assess all impacts to replicate this throughout the country. For example, in Bac Giang province, even in the peak days of the outbreak, it was not necessary to blockade the whole province.
Bac Giang’s lychee harvest fell at the same time as a strong outbreak, but the province proactively planned to respond by building safe lychee areas; vaccinating lychee growers and drivers to consumption points; proposed the Government to direct ministries, branches and localities to create a "green channel" so that lychees could be quickly approved at COVID-19 epidemic control checkpoints when all procedures for epidemic prevention and control were completed and opened multiple consumption channels on e-commerce platforms.
In addition, many important issues were also handled very quickly by the Government, for example, decisions on a mechanism to import vaccines or having an unscheduled meeting to grasp the situation and quickly issue Resolution 60/NQ-CP on the application of a specific mechanism on licensing the exploitation of minerals as building materials for the construction of north-south expressway project to promote public investment.
Maintaining macroeconomic stability
Issuing its comments on the evaluation of the results of the implementation of the socio-economic development plan and the state budget in the first six months of the year and the plan for the last six months of 2021 at itsrecent 57th session, the National Assembly Standing Committee suggested the Government take the initiative in formulating socio-economic development scenarios in the short and long term. At the same time, it is also necessary to re-evaluate major economic indicators and balances for the whole year, coordinating synchronously between fiscal and monetary policy, while maintainingmacroeconomic stability.
The National Assembly Standing Committee also proposed the Government conduct a comprehensive review and assessment of policies to support people affected by the COVID-19 epidemic in order to make appropriate forecasts and proposals with more effective support policies; timely remove difficulties, develop epidemic prevention and control scenarios in industrial parks and export processing zones; concentrate resources on the research and application of science and technology in disease prevention and control, speed up the implementation of the “vaccine strategy” and recommend strong enough solutions to attack, control and prevent COVID-19 in the coming time. In particular, there must be a solution with a specific roadmap regarding the plan to vaccinate the population against COVID-19 to ensure effective disease prevention and control, creating a premise for socio-economic development.
According to Minister of Planning and Investment Nguyen Chi Dung, in the last six months of the year, the Government will steadfastly implement the dual goals of fighting the epidemic while protecting people's health and promoting socio-economic development; focus on maintaining macroeconomic stability, controlling inflation, ensuring the major balances of the economy; close coordination between fiscal policy, monetary policy and other macro policies; closely monitoring price movements to analyse, forecast and review growth scenarios, and promptly proposing solutions to control inflation. The government will utilise all its resources to provide free vaccinations to the entire population in order to achieve herd immunity.
