He said while the fiscal accounts have deteriorated due to lower revenue, the government was able to absorb the shock,thanks to the accumulation of reserves and the use of contingent funds, limiting the use of new borrowing.
Though the local economy has none the less been hit by the COVID-19 crisis, with the GDP growth rate of 1.8 per cent, the breakdown by sectors indicates that the agro-forestry-fisheries sector recordeda growth rate of 1.2 per cent and contributed 11.9 per cent to the overall economic growth, the industrial sector expanded by 3 per cent (73.1 per cent ofGDP), while the services sector grew by only 0.6 per cent (15 per cent of GDP).
The latest report by the World Bank (WB)said while COVID-19 has spread around the planet, killing hundreds of thousands of people and sending billions into lock-down, as health services struggle to cope, Việt Nam still belongs to a small club of countries that have reported zero deaths caused by the pandemic. This result is even more impressive considering the country is located next to China as the epicentre of the pandemic.
The bank’s director Stefanie Stallmeister said that saving human lives was more important than saving jobs. Several economic and financial indicators have not yet bounced back to their pre-crisis levels, including the gross domestic product (GDP) growth rate that, at 1.8 percent in the first quarter of 2020, was approximately 5 percentage points lower than its historical trajectory in recent years.
Morisset said: “Việt Nam has a unique opportunity to increase its foot print in the world economy and to push ahead with its agenda of reforms so it can accelerate its quest to become a high-income economy in the fore seeable future.”
The bank saw the local GDP continue to expand during the first six months of 2020, albeit at a slower pace than in therecent past while inflation has been contained despite the easing of monetary conditions by the State Bank of Việt Nam, which has led to the expansion ofcredit by commercial banks to businesses.
The bank representative also said Việt Nam has coped with the impact of COVID-19 on its external accounts by maintaining atrade surplus and attracting a relatively large amount of foreign directinvestment (FDI) inflows even though exports have contracted in recent months.
Morisset said as many of the local businesses were home based with family-member employees, household businessescould recover quite quickly after social distancing.
However, he said Việt Nam should do moreto cope with the new situation, saying: “No one knows what will happen in thefew weeks.”
Over the weekend, as more COVID-19 caseswere reported and another wave of social distancing could be applied, the bank said tourism and remittances could be further impacted.
As governmental data indicates that as many as 30 million workers, or more than half of the labour force, could havebeen affected by the crisis, the bank said the country should prepare toretrain its workers.
The report said the impact of the crisishas also not been uniform, raising in equalities across sectors and among people.
As about 90 per cent of the population has a smartphone and a good foundation of digital infrastructure, the World Bank’s representative said: “Việt Nam can take the chance to boost contact-free services and e-commerce.”
According to there port, the on going transformation of the global economy provides the opportunity for Việt Nam to take important policy actions.