Many organizations have begun to make forecasts of Vietnam’s economic losses amid increasingly complicated disease outbreaks. The longer the epidemic, the greater the damage to the economy.
The country may suffer a loss of up to 3.7 billion US dollars, according to a new forecast by the International Monetary Organization (IMF).
According to the first quarter socio-economic report by the Ministry of Planning and Investment of Vietnam (MPI), Vietnam’s economy has been negatively impacted as the world economy is facing many risky and unpredictable difficulties. Therefore, achieving the target of 6.8% growth is a great challenge in the context of drought, saline intrusion, Covid-19 and other diseases on cattle and poultry.
Prolonged disease outbreaks have caused direct losses to sectors such as tourism and transport as well as to import-export activities. Production and investment activities have been indirectly affected. Domestic production associated with trade supply chains of China, Korea, Japan, the US, Europe, etc. has declined due to lack of raw materials, fuel, labor and reduced demand.
According to the latest assessment of the Asian Development Bank (ADB), the level of damage to Vietnam’s economy depends on the epidemic situation, and losses will range from USD 675 million – 3.7 billion, equivalent to 0.3-1.4% of GDP.
The Ministry of Planning and Investment forecasts that the economy will continue to face many difficulties in the coming months caused by the Covid-19 epidemic, which is still very complicated and unpredictable; and the ability to absorb credit packages of USD 285,000 billion of domestic businesses is weak. The disease also causes a decline in trade and production for domestic enterprises. In addition, FDI inflows tend to decrease because foreign-invested enterprises have operated moderately and may postpone the increase in investment capital in the coming time as the epidemic situation has not shown positive changes.
In the newly released report of the National Economics University of Vietnam, Vietnam’s GDP growth is forecast to be only about 2.0% in the second quarter, and there could be an economic recession if Covid-19 is not under control soon. The economy is expected to recover from the third quarter of 2020. Exports will decrease from around 25% in the second quarter and recover to a 15% decrease in the following quarters of 2020.
Experts from this university propose that it is necessary to develop many different economic policy scenarios from short to long term to cope with the epidemic situation in both Vietnam and other countries in the world.
If the epidemic can be controlled in April or at the end of the second quarter, policy responses should be “supportive”. If the epidemic lasts longer (until the third quarter or the end of 2020), the government needs to consider stronger “rescue” measures. The proposed policy solutions need to take into account the delay in the issuance and implementation process to ensure timeliness and effectiveness.