Vietnam should consider stronger support measures to prop up economy

Monday, 2020-08-10 17:10:31
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The government should introduce stronger measures to support businesses.
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NDO - It is already the middle of the third quarter but actually optimum levels of economic activity have only taken place for about four months overall due to the coronavirus pandemic. July saw some better economic indicators after a period of decline due to social distancing measures.

Growth in public investment disbursement hit its highest level for the past five years as many projects accelerated. Exports rose compared with the previous month and the same month of last year while domestic commerce and transport recovered at a faster-than-expected rate. Total retail sales and consumer service revenue also rebounded thanks to nationwide consumption stimulus programmes. Such positive developments have yet to help all businesses recover but have created revenue and improved their liquidity.

Besides some bright spots in the economic picture, there have still been many grey areas over the past seven months. The index of industrial production in July rose at its slowest pace in years and trailed far behind the June level. Some key industrial products witnessed sharp declines or very low growth. The Purchasing Managers’ Index dipped below 50 after two months having stabilised above 50, this being the rate which separates growth and contraction.

It is worth mentioning that the number of workers affected by the pandemic is growing, causing mounting pressure on social security. Amid global economic uncertainties and the return of the coronavirus in Vietnam, economic forecasting has never been so difficult.

Most economists agree that predicting a specific growth figure for the Vietnamese economy in 2020 does not matter anymore and the important thing is trying to maintain a positive growth level as the basis for recovery in the coming years.

It is encouraging that most domestic and international research organisations forecast that Vietnam is one of the few countries that will not fall into negative growth in 2020 and will likely recover strongly in 2021.

With determination to of stave off economic fallout, the government has quickly adopted a new strategy in fighting against the coronavirus outbreak in order to prevent flare-ups and restrict large-scale social distancing to reduce damage to the economy.

Experts have recommended that the government should weigh up its available resources and introduce stronger measures to support businesses, workers and the economy at large. Moreover, it is necessary to continue stepping up public investment disbursement and the promotion of private investment as ways to spur growth and create jobs in contracting industries.