Economic growth targets hard to achieve due to Covid-19 pandemic

Despite the complicated developments of the Covid-19 pandemic in the country, Vietnam's economy is still evaluated to be quite optimistic by international observers, according to information from the Ministry of Planning and Investment.

Not only the forecasts on GDP growth, but another convincing proof is that Vietnam has become the only country in the world that has been simultaneously upgraded the outlook to positive in the latest review by all three international credit rating agencies (Moody's, S&P, and Fitch).

At this time, although there have not been complete statistics, the GDP growth rate in the first six months is estimated at only 5.8 percent, 0.42 percentage points lower than the Government's target. Compared to the GDP growth target of 6 percent and 6.5 percent set by the National Assembly and the Government, respectively, the gap remains very large. As the Covid-19 outbreak at the end of January caused GDP growth in the first quarter to only reach 4.48 percent, 0.64 percentage points lower than the target of 5.12 percent, the fourth wave of Covid-19 will probably wash away no less than one percentage point compared to the scenario of the second quarter. In other words, either the growth scenario must change, or the growth rate of the third and fourth quarters must be higher than the proposed scenarios, which are 6.78 percent and 7.16 percent, respectively.

The Prime Minister has directed the Ministry of Planning and Investment to urgently prepare a project to promote economic growth in the context of the Covid-19 pandemic. The project is in the process of finalization, but a source from the ministry said that the proposed policies and solutions would be divided into two main groups. Group 1 includes policies and solutions that can be issued and implemented immediately to create instant impacts on growth promotion in 2021. Group 2 comprises fundamental and long-term policies and solutions to boost growth in 2022 and the 2021-2025 period.

While long-term policies, as having been mentioned many times in the Government's policies and strategies, drastic solutions with rapid implementation and early results are not easy questions. However, in the short term, perhaps promoting the disbursement of public investment capital, especially ODA, attracting foreign investment, accelerating exports, and developing the domestic market will be indispensable solutions. Amid the context that the Covid-19 pandemic is controlled better in many countries, it is time to reorganize foreign investment attraction in the direction of proactively approaching, understanding, and supporting partners and large corporations to explore investment opportunities in Vietnam. Along with that, it is important to focus on policy dialogue and on-the-spot investment promotion. At the same time, it is essential to grasp the situation and take timely and appropriate measures to remove difficulties for foreign-invested enterprises operating in Vietnam. Supportive policies, especially the direct support through the exemption, rescheduling, and deferral of financial obligations for enterprises. Along with setting up new policies, it is necessary to adjust and supplement the existing regulations soon to disburse the support package quickly.

Moreover, controlling the Covid-19 pandemic is a prerequisite for the economy to operate effectively again. Vaccinating workers and preventing the disease from spreading and breaking out in enterprises and industrial zones, and avoiding the disruption of the supply chain must definitely be on the list of top priorities to maintain and boost growth.