Vietnam will continue a downward trend in its economic growth in the second quarter of this year as the COVID-19 pandemic is lingering on and taking its toll on the global economy, experts have said.

Vietnam’s GDP growth in the first quarter was already the slowest for a decade, at 3.82%
(Photo: VNA)

The Ministry of Planning and Investment said the pandemic is developing in an unpredictable manner, making it difficult to determine when its peak and end will occur.

The ministry noted the outbreak has seriously affected all elements of socio-economic development. Businesses are now facing the risk of material shortages and may be forced to suspend operations, while inflationary pressure is mounting and rising unemployment may impact on social security.

Vietnam’s GDP growth in the first quarter was already the lowest for a decade, at 3.82%, according to the General Statistics Office.

Experts from the Hanoi-based National Economics University (NEU) recently forecast year-on-year growth in Q2 of around 2% or even lower if the pandemic worsens.

Exports may decline by some 25% in the quarter and 15% in subsequent quarters, they added, with economic recovery expected to begin in Q3 at the earliest.

The NEU experts also noted that these figures are only rough estimates at this stage.

They believe Vietnam’s economy may encounter even more difficulties in the months to come, throwing into question domestic businesses’ capacity to absorb the credit package of VND285 trillion (US$12.16 billion) and the influence of a downturn in global trade and production on household consumption and enterprise investment.

They also pointed to a downward trend in FDI inflows, as COVID-19 has made many foreign enterprises reluctant to raise investment capital. Low credit demand, meanwhile, is projected to remain throughout Q2.

Economic expert Nguyen Tri Hieu said that, unlike in Q1, the entire economy will be affected by the pandemic in Q2. Both supply and demand in all sectors, from tourism, aviation, and consumption to exports and imports will be strongly impacted.

“As we have just entered Q2, however, and the pandemic remains unpredictable, it’s still too early to forecast quarterly GDP,” he said.