Preparing conditions to revive the economy

by NDO10 April 2020 Last updated at 14:32 PM - The economy has been hard hit by the COVID-19 pandemic, but Deputy Minister of Planning and Investment Tran Quoc Phuong said that it is time to make thorough preparations to revive the economy after the pandemic passes.

Vietnam needs to soon promulgate and implement supportive measures to revive the economy. Such measures must be carried out quickly in order to maintain economic growth and create momentum for the next period.

According to Deputy Minister Tran Quoc Phuong, the economic situation is really serious, particularly the GDP growth rate of only 3.82% in the first quarter of 2020 as well as other macroeconomic indicators.

In the three-month period, the agricultural-forestry-fishery sector reported insignificant growth (only 0.08%) and the service sector also posted very low expansion at 3.27%, equal to half the increase of previous years. Meanwhile, total retail sales of goods and services in March fell for the first time in the 2016 - 2020 period.

The business community is particularly encountering great difficulties in both input and output, due to interrupted supply chains, canceled orders, and shortage of new orders. Therefore, the number of enterprises who have temporarily suspended operations in the first quarter of this year increased by 26% over the same period last year.

But the challenges will not stop there, because the pandemic is continuing in a complicated manner without any accurate prediction of its end date. The longer the pandemic continues, the more serious the economic situation will be, leading to a deadlock in production, negative economic growth, and higher unemployment.

It is predicted that 250,000 - 400,000 workers could lose their jobs, depending on the duration and seriousness of the pandemic.

International experts share a common view that the global economy has started to fall into recession as a series of large economies including the US, Germany, France, and the UK all forecast negative economic growth rates.

The International Monetary Fund (IMF) has also warned that the COVID-19 pandemic has pushed the global economy into a recession that could be as bad or worse than the 2009 downturn.

Regarding the Vietnamese economy, Tran Quoc Phuong said that the impact of the pandemic on the socio-economic situation is serious and comprehensive and that economic growth has been seriously affected.

The Ministry of Planning and Investment forecasts that GDP growth in 2020 could be 5.32% if the pandemic ends in the second quarter of this year. If the epidemic is controlled in the third quarter, a growth rate of 5.05% is predicted.

According to Tran Quoc Phuong, "overturning the situation" to reach the set target of 6.8% is a great challenge. It depends a lot on the developments of the disease, the longer the disease lasts, the less chance to overturn the situation.

To reach 6.8% growth for the entire year, GDP must expand 8-9% in the third and fourth quarters. This will be extremely difficult, because Vietnam's economic growth depends not only on our own efforts, but also on the resilience of global economies, value chains, supply chains, and others.

Besides fighting against the pandemic, we can also endeavor to solidify socio-economic activity, and then prepare conditions to take advantage of opportunities and revive the economy right after the pandemic ends.

A number of countries around the world have announced large financial support packages to immediately implement urgent policies toward certain groups of people or the economy as a whole.

Many unprecedented solutions and mechanisms have been developed quickly to respond to the situation. For example, the US has approved a relief package of US$2 trillion to support businesses' liquidity, health care, local government, and others. G20 member countries, EU member countries, and Asian countries have also announced fiscal stimulus packages sourced from public budgets worth billions of US dollars.

In addition to the monetary and credit policies set out in the Prime Minister's Directive No. 11, the Government has also looked into the use of part of the state budget to support people affected by the pandemic.

It can be said that the Government is making great efforts to study and implement solutions to solve the "dual task” of controlling the pandemic and maintaining business activities and social stability.

Tran Quoc Phuong said that the pandemic has changed the global economy and if Vietnam does not make thorough preparations from here on, including the restructuring of the economy and the building of key projects to create a driving force for growth in the next period, it will miss the new "game".

Thus, Vietnam also needs to soon devise and implement measures to support the economy. Whatever the solution, it must be done as soon as possible to maintain economic growth and create incentives for the economy to grow in the next period.

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