Despite maintaining positive growth in the first six months of the year, Vietnam's economy in the last months of the year is expected to face many challenges in the context of the complicated and unpredictable Covid-19 pandemic. With the goal of striving for GDP growth of 3-4% for the whole year, it is clear that Vietnam will have to try to overcome many barriers.

Economic picture declines in all fields

In the first half of the year, Vietnam's GDP growth rate was only 1.81%, which is the lowest ratein more than a decade. The reason is that the growth slowdown occurred in all three economic sectors in the first six months of 2020, in particular, the agriculture - forestry and fishery increased by only 1.19%, industry and construction sectorincreasedonly 2.98% and theservice sector increased only 0.57%; in which the first quarter increased by 3.26% and the second quarter decreased by 1.76%. Many service sub-sectors, especially tourism, plummeted.

In the first six months of the year, the business sector faced many difficulties due to the direct impact of the Covid-19 pandemic.However, the statistics may not fully reflect the difficulties ofthe business community.

According to Mr. Nguyen Anh Duong, Head of the General Research Department, Central Institute for Economic Management (CIEM), due to the pandemic in the first months of the year is still relatively short, sothe businesses have had solutions to adapt to the new context. Credit outstanding for the economy only increased by 1.3% in the first quarter compared to the end of the fourth quarter of 2019, and nearly 1.5% in the second quarter compared to the end of the first quarter of 2020, significantly lower than the same period of 2016-2019. The main reason is that the Covid-19 pandemic had a negative impact on the economy and the output for businesses, thereby affecting the demand for loans of businesses.

In the first half of the year, nearly five million workers were affected by the pandemic.The Covid-19 pandemichad a biggerimpact on vulnerable workers and female workers. Average inflation in the first six months reached 4.19%, significantly higher than the same period in previous years. At the same time, the decline of economic activity under the impact of the Covid-19 pandemic was associated with a decline in investment growth, whereby total social investment capital reached VND850.3 trillion in the first half of the year (equivalent to 33% of GDP), up 3.4%, 6.9% lower than the same period in 2019.

However, discussing the tools to promote growth in the first half of the year, related to the private sector, Mr. Nguyen Anh Duong said that besides efforts to promote disbursement of public investment capital, attractingdomestic investment isalso considered one of the five "frontier points" to help Vietnam recover economic growth after the Covid-19 pandemic. Although there was a decrease in the growth rate of investment when it only increased by 4.6%, enterprises in this area were relatively active in adapting to other economic sectors.

According to Ms. Nguyen Thi Hong Minh, Director of CIEM, GDP inthe first half of the year was low, but higher than other countries in Asia.

“The fiscal and monetary operating space is still able to cope with the economic scenarios in the future. Compared to many years ago, especially in the period of global financial crisis in 2008-2009, Vietnam's economy in recent years has shown a lot better resistance,”said Ms. Nguyen Thi Hong Minh.

Caution in assessing the situation

Recently, at the Government Conference with localities, the head of the Government emphasized the determination to achieve economic growth in 2020 at 3-4%. However, this is not an easy goal.

According to CIEM, in the second half of 2020, the Covid-19 pandemic is still happening unpredictablyandcan place economies, including key partners of Vietnam as well as Vietnam itself, before major challenges both socio-economic sites.

Therefore, despite the high evaluation of the results of epidemic prevention and the opportunity for early economic recovery, Vietnam still needs to be cautious in assessing the situation in the last months of the year.

At the same time, implementing appropriate solutions to promote economic recovery, keep reform, and ensure social security. Talking about economic difficulties in the last six months, PhD. Bui Quang Tuan, Director of Vietnam Economic Institute, expressed his concern about investor confidence.

“Currently, many investors are panicking about where to put their capital safely and the common sentiment is to buy assets such as gold but not to invest money, therefore, it should not be thoughtthatFDI capital will "rush" into Vietnam. Besides, the economic pressurewill last for a long time, the economy will be seriously hurt.The enterprises are weak, the recovery will take a long time but cannot be fast.”

At the same time, expert Bui Quang Tuan stated that it is not important for GDP growth of 4% or how much, because GDP increases by 3-4%, it must rely on public credit and investment. This may haveimplications for the economy. In the current stage,the most important thing to do is to "conserve the troops and preserve the forces" so that next year, the stronger forces will begin to attack on the bases.

Commenting on the "three-horse carriage" to promote growth, including exports, Mr. Bui Quang Tuansaid that globaldemand is falling sharply, everyone is worried about instability, so they spend economically and reduce consumption, so exports fall. Currently, we expect to boost exports as a pillar of growth, but according to the aggregate supply - demand formula, the contribution of exports to Vietnam's growth in 2020 will not be much.

“Currently, the orders of enterprises have been broken off in a series. The last six months are just initial difficulties, enterprise lost in the past six months is weak, but the impact of Covid-19 on businesses in the next six months is terrible,”the expert warned.

According to Mr. Nguyen Anh Duong, in the second half of the year, to achieve the highest growth, the management must still be linked to updating and evaluating growth scenarios. At the same time, the Government still needs to have space for policies to deal with the post-Covid-19 scenarios. Accordingly, macroeconomic stability has always been a fundamental element to strengthen the confidence of businesses and consumers as well as consensus on reform and restructuring measures.

Vietnam needs to continue to frankly recognize the internal difficulties and challenges of the economy, such as the quality of human resources and infrastructure, inadequacies in information systems, statistics for operating in a number of areas, or ability to maintain momentum and reform "quality" in key areas such as the business environment.