Proactive administration enhanced for implementation of dual goals

Economic growth in the first two quarters of 2021 was lower than the expected scenario, and the complicated developments of the fourth wave of the Covid-19 epidemic are posing difficult problems for the year-end period; therefore, the Government has taken prompt responses to promote growth drivers and gradually establish a new normal.

Workers at VSIP Bac Ninh Industrial Park are provided with personal protective equipment to prevent COVID-19 epidemic. (Photo: NDO)
Workers at VSIP Bac Ninh Industrial Park are provided with personal protective equipment to prevent COVID-19 epidemic. (Photo: NDO)

Six-month GDP forecasted to increase by 5.8%

Updating the data on the socio-economic situation at the end of May with clear reflections on COVID-19 fourth outbreak, the Ministry of Planning and Investment has issued forecasts for the country’s situation, including basic macroeconomic indicators.

Accordingly, gross domestic product (GDP) is expected to reached nearly VND4 quadrillion, increasing by around 5.8%, 0.42 percentage points lower than the scenario target set out in Government's Resolution No. 01/NQ-CP and 0.12 percentage points lower than Scenario target, updated again in the first quarter of 2021.

Industrial production – construction is forecast to grow at about 7.85% with a good increase in textiles, footwear, and automobiles. However, electronic products - a key commodity in exports are expected to reach only a low growth rate or even negative growth due to the impact of the Covid-19 outbreak in industrial zones.

This growth is 0.71 percentage points lower than the operating scenario in Resolution No. 01/NQ-CP and 0.06 percentage points lower than the updated scenario for the first quarter of 2021.

Similarly, the service sector is forecast to improve by about 5%, lower than both the scenario target of Resolution No. 01/NQ-CP and the updated scenario target for the first quarter of 2021. However, one positive factor is the forecast that consumption will continue to recover, with total retail sales of goods and social consumption services increasing by 7.1%.

Regarding business registration, enterprises’ operations are likely to face difficulties; therefore, the number of newly registered enterprises may continue its low growth trend (around 1.6%). However, newly registered capital may increase strongly (34.8%). Notably, the trend of enterprises withdrawing from the market is forecast to continue at a high level due to the negative impact of the Covid-19 pandemic.

One bright spot in the national economic picture from the beginning of the year until now is the stable macro-economy, with inflation under control, stable interest and exchange rates, and the lowest five-month average consumer price index in recent years.

State budget revenue increased by 15.2% compared to the same period last year and total import-export turnover recorded a high growth rate, at around 33.5% annually. Innovation activities, the application of science and technology and digital transformation, especially national digital transformation for businesses, have been boosted.

According to a recent World Bank (WB) update on Vietnam’s macro-economy in June, the country’s economy seemed to have been developing relatively well before the fourth outbreak. Industrial production in May increased by 1.6% over the previous month and 11.2% over the same period last year. This showed the high resilience of domestic industry.

Identifying risks

However, the World Bank also warned that the growth rate of Vietnam's economy will slow down if the epidemic is not controlled in the short term. In addition, it may also reduce slightly with the decrease in the export turnover of goods and foreign direct investment (FDI).

In the latest report of the Ministry of Planning and Investment, the risks for the last six months of the year were also identified. Minister Nguyen Chi Dung said that the successful response, prevention and control of the Covid-19 epidemic is an important factor that will play a decisive role in maintaining macro stability and economic recovery in the next few months.

The industry-construction and service industries, especially export-oriented processing and manufacturing, were identified as growth drivers towards the end of the year. In addition, this driving force comes from the increase in investment and the expansion of commercial activities. Ministries, agencies and localities should promptly remove institutional obstacles to mobilise all resources for the country’s development as well as enhance administrative reform and creating the most favourite conditions for production and business.

Minister Nguyen Chi Dung also stated it is essential to proactively and timely implement measures to support people and businesses affected by COVID-19, particularly employees who lost their jobs such as workers in industrial parks.

Dr. Nguyen Duc Kien, head of the Prime Minister's economic advisory group, said the Government has made many changes in accordance with the new situation. Solutions in the last six months will focus on three main pillars, including the anti-epidemic fight, strong promotion of public investment and the opening up of the economy.

The Government's point of view is that each locality will react based on the actual situation to set out measures to successfully implement the "dual goals" and then study and assess their impact for replication throughout the country.

For example, Bac Giang's lychee harvest fell at the t time of a strong outbreak of COVID-19. However, the province had proactively planned to respond the situation by developing safe lychee areas and vaccinating lychee growers and drivers who transport products to consumption areas. The locality also proposed the Government direct ministries, agencies and localities to create a "green channel" so that its lychees can quickly pass COVID-19 checkpoints as all procedures on epidemic prevention and control have been completed. The opening of many consumption channels on e-commerce exchanges has also be boosted.

“With this management, I believe that Bac Giang’s lychee crop this year will be successful, opening the hope of successful crops for other agricultural products and prosperity for the whole economy. That has also been the administration’s motto using its experience in the designing of macro policies”, added Dr. Nguyen Duc Kien.

Besides these, many important issues were also handled very quickly by the Government such as a decision on a mechanism to import vaccines or an unscheduled meeting to resolve obstacles related to materials for the North-South Expressway project.

Translated by NDO