Difficulties in forecasting Vietnam's economic growth

	Impatient with the speed of disbursed public investment capital
	Macroeconomic stability and growth targets require consideration
	Government strives to achieve annual economic growth of 4%

Variables are constantly changing

Regarding the volatility of the world economy and Vietnam's economic outlook in the last six months of 2020, the Ministry of Planning and Investment said that international organizations and experts have forecast that global growth in 2020 will be low.

“Particularly for Vietnam, there are many different forecasts. In the context of a lot of fluctuations, the variables are constantly changing so forecasting is facing many difficulties,” said Deputy Minister of Planning and Investment Tran Quoc Phuong.

Speaking about the issues posed to Vietnam’s economy in the last six months of 2020, Mr. Phuong said that it is necessary to review all driving forces for economic development and breakthrough goals such as domestic consumption, public investment and exports to make forecasts.

According to Tran Toan Thang, Head of Department of Industrial and Business Forecast, the National Center for Socio-Economic Information and Forecast NCIF (Ministry of Planning and Investment), the Covid-19 pandemic has had a number of impacts on the global economy.

First, in terms of economic slowdown, many countries have recorded negative growth and are expected to continue to decline in the next quarters. In particular, the global trade could fall by 13-32% in 2020, the expectation of investment reduces, leading to a reduction in export demand, FDI investment, development assistance and remittances.

Second, the trend of anti-globalization is increasing. This is not a new trend but the Covid-19 pandemic has made this process increase due to changes in awareness and control measures of the pandemic.

Third, the Covid-19 pandemic is contributing to stimulating digitalization, increasing e-commerce and online payment methods.

Fourth, it is reshapingsupply chains and investment flows.

Fifth, it is the trend of changing financial and monetary policies. The continued easing of fiscal and monetary policies could lead to the risk of public debt crisis and many instability issues for monetary markets of emerging countries.

Sixth, it is the trend of geopolitical change in the world and in the region.

Proposing solutions to Vietnam, Mr. Tran Toan Thang said that public investment is considered a priority in economic recovery because in the post-Covid-19 period, enterprises had difficulties in capital, so private investment will be difficult to recover. The Government has a policy to accelerate the disbursement of public investment to promote economic growth.

Regarding the orientation of public investment, in the near future, it is necessary to focus on essential and necessary areas for sustainable development and economic transformation in the post-Covid-19 context, such as digital technical infrastructure and connected infrastructure to improve supply chains.

Three pillars for growth

Regarding Vietnam's economic outlook in the last six months of 2020 in the context of the Covid-19 pandemic and some warnings, Mr. Dang Duc Anh, Deputy Director of NCIF, said the driving forces of economic growth in the last six months of 2020 through three pillars are namely consumption stimulation, investment promotion and market expansion.

Accordingly, the import markets showed signs of recovery as a basis for the recovery of processing, manufacturing and exporting industries. Stable macroeconomic, inflation in downtrend and low credit growth are the basis for expansionary fiscal and monetary policy. The space of fiscal and monetary policy is an opportunity for increasing aggregate demand.

Referring to some economic warnings, Mr. Tran Duc Anh proposed a number of solutions to promote and recover the economy in the last six months of 2020 such as the need to accelerate the salary reform roadmap for officials and public servants; VAT reduction in the period from now to 2022; further lowering of the ceiling interest rate for short-term deposits; extension of the roadmap to reduce the ratio of short-term loans to medium and long-term loans; capital transfer to projects with high disbursement speed.

According to Mr. Dang Duc Anh, Vietnam's economy in the last six months of the year is assessed to have better prospects thanks to the Government's efforts and the positive impacts from the Government's policies.

In addition, the positive effects from FTAs ​​and the advantages that Vietnam has gained are positive factors affecting domestic trade and production.

Vietnam could achieve economic growth of 5.2% this year The national economy is likely to enjoy a stellar growth rate of 5.2% this year if all-out ...

However, the NCIF’s representative also said that Vietnam's economy still faces many challenges such as the risk of a second wave of the Covid-19 pandemic, the difficulties of input and output of domestic production, disbursement of investment capital, unstable consumption psychology, potential risk of inflation and exchange rate increase pressure and credit downtrend, which show that the economy’s production scale is under pressure of narrowing.