Recently, the Vietnam Institute for Economic and Policy Research (VEPR) - VNU University of Economics and Business held an online seminar to announce the Macroeconomic Report for the second quarter of 2021.At the seminar, Assoc.Prof.Dr. Pham The Anh who is an expert in macroeconomics, head of the Macroeconomics Division of the National Economics University (NEU) said that the global economy recovered in the first six months of 2021 thanks to the increasingly high percentage of Covid-19 vaccination in countries worldwide.
Some
countries plan to reopen after the epidemic has been under control in the third
quarter of 2021. In which, the US and Chinese economies have had the most
outstanding recovery since the beginning of 2021. European economies are still
in a state of continuous decline in the first six months of 2021. However, the ability
of controlling the epidemic along with the expansion of the Covid-19 vaccination
programs has helped many European countries open up and show signs of recovery.
Vietnam
grew by 6.61% in the second quarter of 2021
According
to VEPR, continuing the growth momentum since the third quarter of 2020,
Vietnam's economy grew by 6.61% in the second quarter of 2021, higher than the
growth rate of the same period in 2020 (0.36%).
In
the first 6 months of 2021, the agriculture, forestry and fishery sector grew
by 3.82%, the industry and construction sector by 8.36%, and the service sector
by 3.96% over the same period last year. In 2020, the second quarter of 2020
recorded an increase of 3.83% in agriculture, 4.1% in forestry, and 4.96% in
fisheries. In particular, the seafood industry grew strongly again thanks to
the recovery in demand from foreign markets.
The
industries, processing and manufacturing industries continued to play the
leading role in the growth of the economy in the second quarter of 2021 at a
rate of 13.84% and only lower than the same period in 2011 and 2018 during the
period 2011 - 2021.
Assoc.Prof.Dr.
Pham The Anh judged that the growth rate that Vietnam achieved was based on the
following factors: The epidemic has been controlled well by the government from
the end of the first quarter of 2021, helping to maintain the economic
activities of the country.
The
countries of the European Union (EU) are reopening; and enterprises, especially
FDI enterprises, make good use of the EU - Vietnam Free Trade Agreement (EVFTA)
to restore the processes of goods production and export to the EU market.
Besides,
the progress of disbursement and construction of key public investment projects
has been accelerated; a wave of trade and investment shifts to spread risks
from the US - China trade conflict and disruptions of global supply chains; The
macro-environment is stable, inflation is controlled at a low level helps
creating an environment for the implementation of policies to support growth.
However,
the outbreak of the Covid-19 epidemic again in the middle and end of the second
quarter of 2021 has continued to disrupt the production process of local enterprises
where the epidemic is in outbreak.
On
the other hand, the weakness of Vietnam's economy also comes from internal
risks such as large fiscal imbalance, slow pace and low level of development
investment, especially in infrastructure; although the health of the
banking-financial system has been gradually strengthened, it is still
vulnerable; the heavy dependence of growth on the FDI sector, lack of autonomy on
technology and raw materials.
At
the same time, the quality of labor is low and slow to improve; low efficiency
of public investment; The process of equitization of state-owned enterprises
has been stalled, the businesses and institutions environment, although
gradually improved, but have not fundamentally unleashed the strength of
enterprises, which are also outstanding weaknesses of Vietnam.
Three
scenarios to forecast economic growth
With
the current epidemic situation, Pham The Anh informed that VEPR lowered its
forecast for Vietnam's economic growth in 2021 compared to previous reports.
According
to Pham The Anh, the economic outlook in the last months of this year depends
heavily on the speed and scale of vaccination; effectiveness/side effects of
disease prevention measures and packages of support and promote the growth of
the country.
Based on the actual situation, VEPR offers three forecast scenarios
with the assumption that Vietnam's major trading and investment partners will
successfully deploy vaccination by the beginning of the fourth quarter of 2021
and control and resurgence of the epidemic, economic activities are restored,
and the trade tensions and political uncertainty are eased.
Baseline scenario: The epidemic is controlled by the end
of the third quarter of 2021, the vaccination against Covid-19 is deployed
quickly and community immunity is achieved in the second quarter of 2022, the
macro-economy keeps stable. Economic growth for the whole year is forecast at
4.5 5.1%.
Favorable scenario: The epidemic is controlled in August
2021, vaccination is accelerated and the community immunity is achieved in the
first quarter of 2022, the macro-economy keeps stable. Economic growth for the
whole year is forecast at 5.4 - 6.1%.
Adverse
scenario: The epidemic cannot be controlled and economic activities cannot
return to normal until the fourth quarter of 2021, the vaccination process is
implemented slowly due to lack of supply source; policies to support people and
businesses, restructuring and digital transformation were promoted, but
services, trade and FDI attraction recovered slowly. At that time, Vietnam's
economy in 2021 can only grow from 3.5 - 4.0%.
In
general, Vietnam's economy is on track to recover in the first 6 months of 2021
but has complicated developments due to the spread of the disease at the end of
the second quarter of 2021 and the beginning of the third quarter of 2021
negatively affect to people's lives, as well as the production process of
enterprises, and to the recovery momentum of Vietnam's economic growth.
Therefore,
VEPR made three recommendations:
Firstly, Vietnam needs an overall and
consistent strategy to deal with epidemic situations; Inadequacies related to
cross-contamination at isolation areas, medical declarations, disruptions in
goods circulation due to extreme measures, lack of medical equipment, need to
be concentrated resources to solve quickly.
Second, the Government and Ministries should
urgently deploy and disburse the support packages to unemployed workers,
especially those in the informal sector.
Third, fiscal policy should focus on
promoting the disbursement of large infrastructure investment projects at the
national level, laying the foundation for the post-pandemic recovery period.
Along with that, accommodative monetary policy should be implemented with money
supply growth must be controlled at an appropriate level (10%) and risk control
measures at a moderate level.
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