2020: GDP growth target hard to reach due to nCoV

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Seminar “How does Corona virus affect Vietnamese economy?

At the seminar "How does corona virus affect Vietnam's economy?" held on February 6 in Hanoi, economic experts all said the impact of acute respiratory infections caused by corona virus (nCoV) would affect the trade relations between China and Vietnam, and economic relations with other countries. Moreover, this creates a greater cost in the production process and people's lives.

In addition, many analysts listed dozens of sectors which would affected including tourism, transportation, retail, energy, raw materials, agriculture and more.

According to Director of the Vietnam Institute for Economic and Policy Research (VEPR) Dr.. Nguyen Duc Thanh, China has been the largest market of international tourists for many years, accounting for about a third of total international visitors to Vietnam. Stopping of flights to and from China not only greatly affects the aviation sector but also seriously reduces the number of Chinese tourists to Vietnam.

The sharp decline in Chinese tourists not only threatens to disrupt the tourism sector's goal of attracting international tourists, but also makes a strong impact on the tourism sector’s revenue as well as its contribution to national GDP.

Former Director General of the Institute of Policy and Strategy for Agriculture and Rural Development Dr. Dang Kim Son said that not only the tourism sector but also the agricultural sector was facing many difficulties, especially when the consequences of African swine fever in 2019 have not been fully addressed and are ongoing.

From the vast influence on many industries, Dr. Son forecasted that GDP growth in the first quarter would not be able to reach the estimate. According to Dr. Nguyen Duc Thanh, the VERP forecasted that the 6.8 percent-growth rate for the whole year 2020 would be difficult to hit and it would be only 6.4 percent.

In many scenarios that VERP offered to the tourism industry, Thanh forecasted that the tourism industry's decline will be 0.4 percentage points. Therefore, the negative impact of the tourism industry makes GDP fall to about 6 percent, but this figure has not included losses from agriculture, minerals, raw materials sectors.

Realising these impacts, authorities have offered many directions and solutions to minimise losses, support enterprises and people to ensure growth targets.

However, Thanh recommended the State be cautious when using support policies through macro tools such as monetary, fiscal, and credit. Support should be provided for the right affected sectors to avoid providing for other sectors such as real estate, which will cause market bubbles or ineffective support.

In particular, this expert said it was necessary to pay attention to micro-support tools within sectors and the market to help enterprises have new and technical and appropriate solutions.

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Agreeing with this, Nguyen Thi Thanh Thuc, Chairwoman of the Board of Directors of Bagico Joint Stock Company, said it was not only the time of the epidemic that the company faces difficulties in exports. One of the difficulties of enterprises is regulations on traceability of exported agricultural products including area code, establishment code or traceability stamp. Therefore, policies need to support agricultural exports more quickly.