August 09, 2020 09:53

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How new strain of Corona virus hurting Vietnam's economy?

09:12 | 13/02/2020

VCN - The Ministry of Planning and Investment has issued two scenarios for economic growth due to the effects of an acute respiratory infection caused by a new strain of coronavirus.  

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Activities of many businesses are affected by the coronavirus epidemic. Artwork: H. Diu

Possibility of not achieving growth target

Accordingly, in scenario one,if the corona epidemic is promptly controlled in the first quarter of 2020, the estimated GDP in 2020 will increase by 6.27 percent over the previous year (0.53 percentage points lower than Resolution 01).The first quarter will increase by 3.8 percent; second quarter by 6.55 percent; the third quarter by 7.07 percent and the fourth quarter by6.81 percent.

In scenario two,if the coronavirusepidemic is controlled in the second quarter of 2020, the estimated GDP in 2020 will increase by 6.09 percent over the previous year (0.71 percentage points lower than Resolution 01), of which the first quarter will increase by 3.8 percent; second quarter by 5.81 percent; third quarter by 7.05 percent and fourth quarter by6.81 percent.

The Ministry of Planning and Investment estimates that in2020, the GDP growth rate of 6.8 percent as set out in Resolution No. 01 / NQ-CP will be a great challenge and it is unlikely that the target will be achieved.

Average CPI is high

Assessing the impact on prices and inflation, the Ministry of Planning and Investment said that in the case of the coronavirus epidemic ending in the first quarter of 2020, the prices of food products were likely to rise higher in the second quarter of 2020 (compared to the scenario on January 31, 2020).

If the coronavirus epidemic continues into the second quarter of 2020, the prices of fresh food products will increase due to declining production activities and increasing in the last months of the year.

Specifically, inscenario one,prices of food, foodstuffs, beverages, and apparel only increase during theTet holiday due to increased demand, then return to a stable level in accordance with the nature of consumption; the impact of the coronavirus epidemic ended in the first quarter of 2020, the CPI in February and March 2020 decreased compared to the previous month; petrol and gas prices did not increase compared to 2019; the price of educational services increased according to the impact roadmap, increasing CPI by 0.35 percent. The average CPI forecast for 2020 compared to 2019 will increase by 3.96 percent.

In scenario two,assuming the same as scenario one but the average price of pork in 2020 will increase by 10 percent, impacting CPI about 0.42 percent; petrol price adjustment increased by 5 percent, affecting CPI by about 0.5 percent; gas price increase of 10 percent is estimated to impact the CPI increase of about 0.12 percent; natural disasters and adverse weather such as drought, saline intrusion, water shortage for hydropower may occur. The coronavirus epidemic will continue its development to the second quarter of 2020. The average CPI forecast for 2020 compared to 2019 will increase by 4.86 percent.

Sharply fallingimport and export

In both scenarios,the Ministry of Planning and Investment expects imports and exports tosharply decline.

In scenario one, if the coronavirus epidemic ends inthe first quarter of 2020, exports are estimated at US$46.5 billion in the first quarter, down 21 percent over the same period last year. In particular, exports of agricultural products and processed agricultural products, forest products and seafood will drop sharply. Mobile phones and accessories also drop by 27 percent.

Particularly, exports to China in the first quarter reach US$5.6 billion, down 25 percent over the same period last year, of which agricultural and processed agricultural products, forestry products decreased by about 30 percent, and aquatic products decreased by 33 percent.

In terms ofimports, it is estimated that import turnover will reach US$50 billion in the first quarter, down 13 percent from the same period last year.

In scenario two, if the coronavirus epidemic ends at the end of the second quarter of 2020, the estimated export turnover in the second quarter will reach US$51 billion, down 20 percent compared tothe same period last year.

Exports to the Chinese market will fall sharply. Specifically, in the second quarter reach US$5.6 billion, down 56 percent compared to the same period last year, of which agricultural and processed agricultural products, forest products will fallby over 60 percent, and aquatic products by 57percent.

Imports will also drop significantly, estimated that in the second quarter, import turnover was US$53 billion, down by 16 percent YoY.

In particular, imports from China in the second quarter reacha turnover of US$15 billion, down 23 percent from the same period last year, mainly consumer goods and production materials.

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In addition, the report of the Ministry of Planning and Investment also forecasts that if the epidemic lasts throughthe first quarter, the loss of revenue from international visitors in 2020 is about US$2.3 billion, if the epidemic lasts for the second quarter, damage will be about US$5 billion.

By Huong Du/Bui Diep