Vietnam likely to lower yearly economic growth rate to 4.5%

VOV.VN - Having factored in the damaging impact of the novel coronavirus pandemic, the Government has proposed adjusting the country’s annual GDP growth target from its initial figure of 6.8% to 4.5%.

vietnam likely to lower yearly economic growth rate to 4.5%  hinh 0
Minister of Planning and Investment Nguyen Chi Dung presents two economic growth scenarios for Vietnam, proposing a growth rate of 4.5%  from the original 6.8% target
Minister of Planning and Investment Nguyen Chi Dung, representing the government, made the proposal during the current session of the National Assembly Standing Committee in Hanoi on May 15.

Minister Dung stated that the pandemic has taken a heavy toll on the global economy, with Vietnam being no exception. Therefore, the country will have to review each of its major socio-economic development targets that had been previously set for the year in order to fall in line with the current global context. 

The Minister then presented the Government’s two economic growth scenarios for the remainder of the year.

The first scenario outlines the nation successfully curbing the disease in Mid-April, whilst other countries which make up Vietnam’s major trade and investment partners manage to recover in the third quarter. In line with this scenario, the Vietnamese economy would be projected to grow by between 4.4% and 5.2%, or approximately 2% lower than the original 6.8% target set by the National Assembly.

In the worst-case scenario, with the country controlling the virus in Mid-April, major trade and investment partners are unable to rebound until the fourth quarter. In this case, the nation’s GDP is forecast will hover between 3.6% and 4.4%, far lower than the initial target of 6.8%.

Considering every possible factor, the Government has therefore proposed lowering the rate to 4.5%, whilst simultaneously striving to raise the rate to 5.4% providing that the disease is successfully contained and the market enjoys a strong recovery globally.

According Minister Dung, the Government has recently submitted an extensive master plan detailing economic recovery, including major adjustments, to the Political Bureau of the Party Central Committee.

As a result, the Politburo is scheduled to meet next week in order to thoroughly examine the plan. If the Party’s highest body grants their approval, the Government will then produce a report to the National Assembly.

Despite this, National Assembly Standing Committee members described the Government’s report as unconvincing and therefore asked for a detailed explanation which outlines the pros and cons of adjustments to reflect global market changes.

“If a target is renewed, it will change the entire budget estimation,” said Phung Ngoc Hien, Vice Chairman of the National Assembly. “Vietnam has brought the disease under control, but the situation has yet to improve globally. It is difficult if it comes to the openness of the economy.”