WB warns of falling production amid COVID-19 outbreak

VOV.VN - The nation must pay close attention to promoting the development of industrial production and retail due to both sectors continuing to be adversely impacted by the novel coronavirus (COVID-19) pandemic, according to the World Bank (WB).

The bank stated in a recent report that the fourth outbreak of COVID-19 has led to the sharpest rise in terms of the number of COVID-19 infections since the pandemic first broke out in the country early last year. This has therefore forced the Government to implement tougher travel restriction measures, especially in main urban centres and several industrial parks.

According to information provided by the report, industrial production in May exhibited high resilience by growing by 1.6% compared to the previous month, although retail sales fell by 3.1% due to being affected by social distancing and the closure of shops.

Furthermore, the nation’s external economic position slightly eroded in May due to respective declines of 6.7% and 20% in merchandise exports and foreign direct investment (FDI) commitments compared to the previous month.

Domestic prices also surged by 0.3% against April, driven by higher global commodity prices, while credit expanded at a slower pace due to weakening economic activities and slightly higher interbank interest rates.

The State budget also posted a surplus of VND 86 trillion, equivalent to US$3.7 billion, over the last five months, and 49.7% of the target set for this year, thereby pushing the State revenue to expand by 15.2% annually.

Total budget expenditure dropped by 3.7% on-year to reach VND 581.6 trillion, mainly due to the fall of public investment disbursement, down 16.5% from last year.

The lack of materials for production has therefore caused high prices to be one of the primary reasons behind the delay of public investment projects, experts from the WB have said.

Exports may also be affected by production contraction in some industrial zones, they added.

The Vietnamese Government should consider adopting a more appropriate fiscal policy to support individuals and businesses affected by the COVID-19 crisis, along with stimulating domestic demand in the event that the ongoing outbreak is not swiftly brought under control.