The Vietnam Institute for Economic and Policy Research (VEPR) joined with the Konrad Adenauer Stiftung to co-host a workshop in Hanoi which unveiled the Quarter I Independent Assessment of Vietnam’s Macroeconomic Performance, with several senior economic experts also participating in the event.

In introducing the occasion, Pham The Anh, VEPR’s chief economist, outlined the global macroeconomic picture before going into more detail about activities relating to the Vietnamese economy during the first quarter of the year.

The report indicates that the novel coronavirus (COVID-19) is responsible for the slowdown in economic growth occurring in several major countries during the first quarter of 2020. Moreover, oil prices have substantially decreased as a result of both the low demand and the collapse of talks between OPEC and Russia to cut supply. 

The People’s Bank of China have cut the required reserve ratio by 0.5 to 1%, therefore releasing CNY550 billion into their economy in an attempt to negate the effects of the pandemic. 

Elsewhere, the United States government has introduced different measures to stabilise the economy in response to the pandemic, including introducing a stimulus package, tax relief, tax extensions, and cash handouts. In addition, the Federal Reserve System has also moved to decrease federal fund rates while also buying financial securities. 

The scale of the pandemic to hit Europe has forced many countries to close borders, resulting in disturbances to occur in supply chains and manufacturing activities. This has seen the European Central Bank maintain interest rates but spend an additional EUR120 billion to buy assets until the end of the year. 

Amidst all this, the Vietnamese economy was poised to grow by 3.82% in the first quarter of 2020, its lowest rate in 10 years. 

Factors such as climate change, saline intrusion, and African swine fever have all had a huge effect on the country’s agro-forestry-fisheries industry, only increasing by 0.08% during the first quarter of the year. Simultaneously, the COVID-19 has significantly hurt services, the commercial sector, and international trade in general. 

Throughout the reviewed period, a total of 29,711 new enterprises registered for establishment, with registered capital totaling VND351,400 billion.

Along with this figure, the number of firms ceasing operation increased sharply to 30,902 while the average inflation rate stood at 5.56% on-year. High demand for goods during the Lunar New Year and for medical supplies during the recent pandemic can be attributed to causing price hikes. 

The VND/USD exchange rate at both commercial banks and the State Bank of Vietnam (SBV) had increased sharply by the end of the first quarter, standing at VND23,660 per US$1. On March 16, the SBV decreased operating interest rates in an effort to support the economy. 

Domestic gold prices have followed a similar pattern to international gold prices. As uncertainty increases due to the pandemic in major economies, gold prices are expected to remain high. 

Assuming that the pandemic does not occur locally in the same manner as it hit Wuhan, it is estimated that the country’s economic growth will be 4.2% in the best-case scenario, and -1% in the worst-case scenario.