Pham The Anh, VEPR's chief economist, told the workshop, which said of the local macro-economic performance in the last quarter of 2020, “With an unfavorable scenario, the economy can grow only 1.8 or 2 percent.”

Releasing the report on the first nine months of 2020, Anh said Vietnam's economic prospects depended on the ability to control the pandemic not only in the country but also around the world.

According to VEPR, factors that can support growth include the free trade agreement and investment protection agreement between Vietnam and the EU (EVFTA and IPA), disbursement and construction progress of key public investment projects.

At the workshop

Anh mentioned the positive conditions including low-cost raw materials due to decreased demand for consumption, a stable macro environment, as well as controlled inflation at an average level, adding they were creating good conditions for growth.

The report said Vietnam's trade surplus reached USD 16.52 billion, a record in the past 15 years, thanks to strong exports, while imports decreased slightly. Specifically, the export turnover in nine months was estimated at USD 202.57 billion. Phones and components were still the items with the largest export value, reaching USD 36.78 billion, accounting for 18.16 percent of total export turnover. Following were machines, equipment, tools and spare parts with USD 18.2 billion, up by 39.8 percent. Import turnover was estimated at USD 186.5 billion in the period.

However, he stated Vietnam was still facing many risks and challenges in an uncertain economic environment, adding, “The pandemic resurgence in many countries was accompanied by blockade measures that could prolong supply chain failures while geopolitical conflicts between major countries can expose an open economy like Vietnam to unexpected risks.”

Internal risks such as a large fiscal imbalance, low speed and level of development investment, especially infrastructure and vulnerable health of the banking and financial system, the dependence on the FDI sector, low quality of labour, low efficiency of public investment and the delayed process of equitization of State-owned enterprises were mentioned in the report.

Anh said, “The current forecast is lower than our estimate in our previous report due to the return of the pandemic in the central cities in July which disrupted the recovery of the tourism industry. Additionally, this includes a more unfavourable case when Vietnam's partner countries have to re-apply blockade measures.”

VEPR chief confirmed: "The top priority now is to ensure social security, to keep the macroeconomic environment stable, to reduce the burden on businesses having to suspend operations and support active businesses."

Anh said Vietnam must continue the support quickly to the right people, encourage to develop credit, give incentive policies, improve the institutional environment for groups of businesses and speed up public investment.

The report also suggested Vietnam diversify import/export markets to avoid relying heavily on a number of major economic partners, improve administrative procedures, the business environment, and build up a fiscal cushion to prevent shocks brought by a crisis like the COVID-19.

Source: VNA