The two scenarios for Vietnam’s economic growth in 2020 have just been very cautious by the Central Institute for Economic Management (CIEM).
CIEM forecasts the highest GDP growth this year can reach 2.6%.
Specifically, in the first scenario, in the case of a severe global economic downturn, CIEM forecasts, GDP growth is about 2.1%.
The basic indicators of the economy are down compared to 2019, of which exports for the whole year may fall by 3.1%, trade surplus is estimated at only USD 1.7 billion. However, inflation is still likely to exceed the limit set by the National Assembly, about 4.3%.
According to CIEM, this scenario is based on an updated evaluation by international organizations of the global economic downturn due to the impact of the Covid-19 epidemic.
In particular, the world’s GDP forecast according to the latest assessment of the International Monetary Fund (IMF) may decline to 4.9% in 2020.
According to the forecast just released in mid-June 2020 of EIU, the price of agricultural products exported on the world market decreased by 1%, especially the world crude oil price plummeted at 37.5%.
Meanwhile, for domestic macroeconomic indicators, the assumptions for giving growth to scenario 1 based on the VND / USD exchange rate of commercial banks increased by 1%, the total means payment increased by 10%, credit increased by 8%, import price of goods decreased by 0.5%, crude oil export volume decreased by 4.1% compared to 2019.
On the balance of payments, the transfer of the Government and the private sector (net) decreased by 10% and 5% respectively. Implemented capital of the FDI sector, including both foreign and Vietnamese, has remained unchanged compared to 2020, with the disbursement of investment from the state budget at VND 396,000 billion.
In scenario 2, the growth rate is brighter with the forecast of GDP growth of the whole year may be higher at 2.6%, export growth will be lower than scenario 1, expected to decrease by 1, 9%, the trade balance surplus will be higher, about 2.1 billion USD in 2020.
Notably, inflation in Scenario 2 is quite high compared to the 4% set by the National Assembly, which may reach 4.5%. Therefore, in this scenario, inflation is a factor that needs to be monitored to have appropriate control measures, to avoid affecting the target of price management as well as economic growth.
With this scenario, according to CIEM calculations, the total annual disbursement of public investment capital is expected to reach VND 466,000 billion, focusing on key projects that have been approved by the Government, especially focusing on accelerating disbursement of key spillover projects to create motivation for economic growth in the fields of infrastructure, high-tech agriculture development, climate change response.
In addition, external factors affecting this scenario include the world GDP growth rate declining at a lower rate, with a decrease of 2% in 2020, the price of exported agricultural products increased by 1%, and the price of oil. Crude world decreased by 30%. Domestically, total means of payment increased by 12%, credit increased by 11%.
Evaluating the prospects of economic growth in the last 6 months, Mr. Nguyen Anh Duong, Head of CIEM Synthesis Research, said that macroeconomic developments in the last 6 months of 2020 may be influenced by the resonance of a factor number.
It is noteworthy that the forecast of the second outbreak of Covid-19 epidemic is very large, so the economy is still unpredictable and unpredictable.
In addition, according to Mr. Duong, the fact that many economies implement large-scale support packages, while lack of coordination between these measures at a global level, can pose significant risks for World financial markets and global debt status.
This factor will likely have a strong impact on the capital market and domestic investment. In addition, trade tensions between major economies may be more complicated, especially in the third quarter and the first half of the fourth quarter continue to have significant impacts on exports and trade.
Despite high expectations on the positive impact of EVFTA, Mr. Duong warned, Vietnam may face many trade defense lawsuits, tax evasion investigations and origin fraud in the country next time, not just in the US market. On the other hand, on the business side, the degree of adaptation to the domestic market may affect production and consumption in the context of the Covid-19 pandemic.
In this context, CIEM recommends that the Government maintain a flexible and prudent monetary policy, closely monitor exchange rates and prices of important commodities in the global market to manage the exchange rate to limit. pressure effects increase inflation. At the same time, considering continuing to reduce interest rates for priority sectors, flexible administration of liquidity of commercial banking system to support credit, bond issuance …