Monday, March 30,2020 - 17:51 GMT+7  Việt Nam EngLish 

GDP growth in 2020 and impact of Covid - 19 

 Sunday, February 16,2020

AsemconnectVietnam - According to the Ministry of Planning and Investment, Vietnam might not reach GDP growth target in 2020 due to COVID-19 outbreak.

The country might fail to achieve its 6.8 per cent GDP growth rate target set earlier this year as the novel corona virus epidemic continues to take a heavy toll on the global economy.

The forecast for the impact of novel corona virus on Vietnam’s GDP growth rate
According to the Ministry of Planning and Investment, Vietnam’s gross domestic product (GDP) growth is expected to reach 6.25 percent in 2020 if the outbreak of corona virus disease (COVID-19) is contained within the first quarter of this year. The figure will be 0.55 percentage points lower than the previous goal.
In case the disease is contained in the second quarter, the Viet Nam’s economic growth this year goal will be 5.96 per cent, 0.84 percentage points lower than the original.
The ministry cited Professor Warwick McKibbin from the Australian National University, who counted losses for the world economy due to the SARS outbreak in 2003 at US$40 billion and put the damages from COVID-19 at triple or quadruple this number at $120-160 billion.
It also said Viet Nam would suffer “significant impacts” due to its open economy, long border and busy trade with China, which have already manifested through the plummeting number of tourists, disrupted supply chain, and backlogs of Vietnamese agricultural produce at Chinese border checkpoints.

According to the Prime Minister Nguyen Xuan Phuc, amid the unpredictable developments surrounding the outbreak, if Viet Nam is to continue to act as normal, the country’s growth will certainly suffer. He asked the Ministry of Planning and Investment to draw up plans to keep the rate at 6.8 per cent, especially the growth for the second half of 2020.
Mr. Phuc said that measures must be found to resolve difficulties in all sectors from commerce to tourism or import-export activities, underlining the need for more robust restructuring of the economy and considering options such as stimulus packages, accelerating disbursement and lowering interest rates and fees. Necessities like electricity, health, education and other public services will not be subject to any price increase for the moment.

Vietnam’s CPI projected to decline in February and March
Vietnam’s consumer price index (CPI) in February and March will be lower than that in the previous month if the acute respiratory disease caused by the novel of the corona virus (Covid-19) ends in Q1, according to the General Statistics Office (GSO).
Vietnam’s consumer price index (CPI) in February and March will be lower than that in the previous month if the acute respiratory disease caused by the novel of the corona virus (Covid-19) ends in Q1, according to the General Statistics Office (GSO).

Pharmaceutical and electricity prices are likely to rise in the coming time due to the Covid-19 outbreak, according to the GSO.
Meanwhile, the prices of meat and vegetable, catering and tourism services, hotels and entertainment may decline due to a downward trend in consumer’s demand.
The GSO predicts that food and foodstuff prices will surge, regardless of whether the Covid-19 outbreak ends in the first quarter of 2020 or continues afterwards.
In the first scenario, the prices of food, beverages and garment-textile strongly rise in the Lunar New Year holiday due to increasing demand then stabilize in line with consumption rule, with the Covid-19 ending in Q1. In that case, this year’s CPI is projected at 3.96 percent.

Meanwhile, in the second one, if the prices of pork, petrol and gas all increase, worsened by unfavorable weathers such as drought, saline intrusion and water shortage and the virus threat persists, it may expand 4.86 percent in the year.
To realize the target of keeping CPI below 4 percent in 2020, the GSO proposed that the Government not adjust prices of goods under State management in the first half of the year.
The State bank of Vietnam also needs to stabilize interest and exchange rate in a bid to control inflation rate between 2 percent and 2.5 percent.

Textile and garment sector might face with raw material shortage

Amid complicating developments relating to the novel corona virus epidemic, Vietnam’s garment and textile sector has showed their concerns regarding its impending impact as a number of firms are considering replacing imported raw materials from with domestic ones.

The Ho Chi Minh City Textile and Garment Embroidery Association said that the material import and export proportion of the country’s garment and textile sector currently stands at between 30 per cent and 40 per cent annually.
According to figures released by the Ho Chi Minh City Textile and Garment Embroidery Association, enterprises in the southern city have spent approximately US$7 billion importing raw production materials for the sector, with the majority coming from China.

At present, firms in the city’s garment and textile industry have raw materials for production activities until the end of February as a result of their imports of raw materials ahead of the Lunar New Year (Tet).
Despite this, businesses are becoming increasingly worried about the shortage of the production material source ahead in March and April due to the ongoing impact of the nCoV.
Several businesses are noting that the epidemic could potentially affect trading ties between both Vietnam and China in the coming time.
Currently, local enterprises have moved to adjust their production plans and work alongside each other in a bid to overcome difficulties that may occur in February and March, stated Pham Xuan Hong, Chairman of Ho Chi Minh City Textile and Garment Association.

Rubber and plastic firms might face raw material shortage
Viet Nam’s key industries such as rubber and plastic must take measures to prepare for a shortage of raw materials as a result of the outbreak of the novel corona virus in China, warned industry leaders and economic experts.
Firms may still have some breathing space having stocked up before the Lunar New Year holidays, but things could get tricky soon. Some 80 per cent of raw materials used in Viet Nam’s rubber and plastic industry were imported from China, said president of HCM City’s rubber and plastic association, Nguyen Quoc Anh.
If China’s industries could not resume operations by the end of February, firms must start looking to alternative sources, possibly S Korea and the EU. Longer transport distances and higher prices, however, would likely result in higher costs and massive disruption to operations.

The outbreak had already started hurting a number of Vietnamese firms such as automakers Hyundai and Kia.
Mr. Anh said looking for other partners at this point was near impossible as firms would be unable to negotiate new contracts within a short amount of time due to the auto industry’s complexity and numerous technical barriers.
Similarly, textile firms might start experiencing a shortage of raw materials by the second quarter, said Pham Xuan Hong, president of HCM City’s textile association.
Chinese firms had already said there would be no outgoing shipments before the end of February. As Vietnamese firms rely on China for 30 to 40 per cent of input materials, production would likely be hampered.

Hong advised firms to pool their resources to keep their workshops running through March and April while talking to suppliers in Malaysia and India.
“This is, however, only a temporary solution as it will be extremely difficult to replace China as our main supplier of raw input materials,” he said.
The Vietnam Textile and Apparel Association has urged members to compile reports on the impact of the virus outbreak on their operations and to keep up to date with the latest developments.
Source: VITIC/Vietnamplus.vn/VNS

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