Optimistic signs emerge for Vietnam’s economy

06:00 | 04/09/2020 Economy

(VEN) - Positive economic indicators have emerged in Vietnam in the first seven months of the year despite the Covid-19 pandemic that has crippled much of the global economy. These include a trade surplus and record growth of public investment disbursement. However, the forecast for the remaining months of 2020 is less hopeful and overcoming the challenges will require joint efforts and national consensus. 

optimistic signs emerge for vietnams economy
Regular meeting of the government, July 2020

A report by the Ministry of Planning and Investment at the July 2020 regular meeting of the government shows that macroeconomic stability continued to be maintained in July. Monetary policies were implemented in a flexible manner. The consumer price index (CPI) increased slightly by 0.4 percent compared with June - the lowest monthly growth in the 2016-2020 period, and decreased 0.19 percent compared with December 2019. In the first seven months, however, the CPI increased 4.07 percent compared with the same period last year.

Three optimistic signals have emerged in the first seven months of 2020.

First, total import, export value of agro-forestry-fishery products reached an estimated US$39.5 billion, significantly contributing to Vietnam’s foreign trade. Of that, exports accounted for about US$22.3 billion, down 2.8 percent compared with the first seven months of 2019; imports accounted for about US$17.2 billion, down 4.6 percent, yielding a trade surplus of nearly US$5.2 billion, up 3.8 percent compared with the same period last year. Vietnam’s foreign trade in the first seven months reached US$285.12 billion, down 1.3 percent compared with the same period last year, with exports accounting for US$145.79 billion, up 0.2 percent, and imports accounting for US$139.33 billion, down 2.9 percent. These results yielded a record trade surplus of US$6.5 billion.

The second signal came from the business sector. Despite a 3.8 percent decrease in the number of new companies established in July compared with June, the amount of registered capital increased by 72 percent. In the first seven months, 75,200 new companies were registered, down 5.1 percent compared with the same period last year. Meanwhile, the number of businesses resuming operations was up 17.6 percent; the number of firms waiting for completion of dissolution procedures was down 12.2 percent; and the number of companies completing dissolution procedures decreased by 3.5 percent.

Third, given the successful control of the Covid-19 pandemic in Vietnam, investment in centrally governed provinces and cities returned to normal, with some public investment projects even accelerated. The disbursement of investment capital from the state budget in July and the first seven months of 2020 reached the highest level of the 2016-2020 period. In July 2020, public investment disbursement grew 51.8 percent compared with July 2019 (from 2016-2019, the growth was 6.8-13.5 percent). In the first seven months of 2020, the index grew 27.2 percent compared with the same period last year (from 2016-2019, the growth was 4.8-12 percent).

However, the government affirmed that major challenges remain for the rest of 2020 as Vietnam copes with a new, more serious wave of Covid-19. In this context, the government is giving top priority to curbing the spread of the disease in August to prevent a large-scale outbreak.

Prime Minister Nguyen Xuan Phuc highlighted the need to prevent the economy from being disrupted, especially in major economic centers. He urged special attention for maintaining newly established enterprises and those resuming operations.

Quynh Anh