Vietnam's economy is stable in the "storm"

Vietnam's economy has been returning to high growth momentum. Photo: S.T

Staying stable in a volatile world

Information at the 4th Vietnam Economic Forum (taking place on June 5), the Central Economic Committee said that in the past two years, the Vietnamese economy has faced a series of difficulties without money rates caused by the Covid-19 pandemic. Economic growth was below 3%, the lowest in the past 30 years; millions of workers lost their jobs; thousands of businesses had to suspend production to fight the pandemic; tourism, transportation, hotel and restaurant industries and many other industries were seriously affected; capital market and real estate market have abnormal fluctuations; bad debt in the banking system is at risk of increasing again.

However, under the leadership of the Party, the Government and the Prime Minister, the transition to the state of "safe adaptation, flexibility, effective control of the Covid-19 pandemic" has had remarkable results. Vietnam's economy is continuing to gradually return to the fast growth trajectory as before the pandemic. The economy in the first quarter of 2022 has returned to a high growth momentum, reaching over 5%. The fields of export, investment, and consumption all increased sharply, and investors' confidence increased sharply.

Regarding the management of Vietnam's fiscal and monetary policies, Finance Minister Mr Ho Duc Phoc said that our country's fiscal policy over the past year has been well managed and flexible. Through the anti-pandemic phase, additional resources and funding for pandemic prevention and control and vaccination for all people. This is a huge success. In the fiscal field we have performed in 2021, exceeding budget revenue by 16%, budget deficit remaining at 3.41%

According to Minister Ho Duc Phoc, fiscal and monetary policies have created strength for businesses, ensuring savings in recurrent expenditures to create more resources, and ensuring successful anti-pandemic. In 2022, the Government will continue to flexibly maintain three breakthrough factors in infrastructure construction, digital transformation, administrative reform and institutional strengthening. Along with the implementation of monetary policy, fiscal policies such as reducing taxes, fees, delaying tax debt and land rent for businesses, business households and individuals in priority fields has helped them to have more resources to maintain and restore production after the pandemic. Along with that, focusing on a stimulus package of VND 347 trillion has also created a great boost for the country's socio-economic recovery and development.

Dr. Vu Thanh Tu Anh, Director of the Fulbright School of Public Policy and Management, likens Vietnam to "a bay from the storm" because it maintains a stable state in a volatile world; autonomy, initiative and resilience. Sharing the same opinion, Assoc. Prof. Dr Tran Dinh Thien, former director of the Vietnam Institute of Economics, assessed that the world is going through a period full of risks and uncertainties and is being restructured. In order for Vietnam to stay ranked in the context of the recent "storm", the Government has demonstrated resilience, the ability to operate "unchangeably, improvise", flexibility, sensitivity and decisiveness in policy and act decisively.

Vietnam's economy has gradually recovered and has shown high resilience to difficulties in recent times, which has also been recognized by international experts and organizations. The credit rating agency S&P has upgraded Vietnam's long-term credit rating from BB to BB, noting that Vietnam's economy is on a solid recovery track and forecasting Vietnam's GDP growth in 2022 at around 6.5%. 9% with a long-term trend of 6.5% - 7% from 2023.

Mr. Yoshiki Takeuchi - Deputy Secretary General of the Organization for Economic Cooperation and Development (OECD) said that, thanks to very flexible disease management policies, Vietnam is one of the very few countries in the world that has maintained maintaining positive growth in 2020. In 2021, due to the rapid spread of the new strain Delta, Vietnam was forced to apply strict administrative measures and then promptly change direction to safe and flexible adaptation, effectively controlling pandemics, thanks to a very effective and successful vaccination program.

Building a sustainable economy

In addition to the achievements, Vietnam's economy is currently facing many difficulties and challenges due to the impact of the recent pandemic along with the appearance of many new events in the international context, typically: the Russia-Ukraine conflict has been asking Vietnam to accelerate, more drastically, substantively and more effectively the building of an independent and self-reliant economy associated with extensive and effective international integration.

Therefore, the requirement in the coming time is to build a dynamic, fast and sustainable, independent, and self-reliant economy on the basis of science, technology, innovation, and effective improvement in foreign affairs and international integration. In particular, the independence and self-reliance of the economy should be built on the basis of balancing and strengthening internal resources, while promoting and taking advantage of opportunities brought from outside.

Mr. Andrew Jeffries, country director of the Asian Development Bank (ADB) in Vietnam, recommends that Vietnam continue to diversify its markets; participate in many global supply chains; digitization of customs procedures and green economic development.

Referring to the key tasks and solutions for sustainable economic development, Prime Minister Pham Minh Chinh stated that, first of all, it is necessary to create a peaceful environment, maintain independence, sovereignty and territorial integrity, ocio-political stability, legal environment, creating a foundation and favorable conditions for the development of an independent and self-reliant economy associated with extensive international integration. Focus on protecting the legitimate rights and interests of investors, businesses and people. At the same time, maintaining macroeconomic stability, controlling inflation, ensuring major balances of the economy (revenue and expenditure, import and export, food and foodstuffs, energy and labor) is vital, as is synchronous, effective and flexible coordination of fiscal, monetary and other policies. Strengthen the capacity to analyze, forecast, and proactively develop appropriate and timely response scenarios and plans to external fluctuations and shocks.

In addition, it is necessary to focus on restructuring the economy in association with innovating the growth model in a substantive and more effective way, promoting science and technology, innovation, digital transformation, and developing the digital economy digital society, supply chain diversification. Focus on building a strong national industry, foundation industries, deeply participating in the global value chain; urban economic development, regional linkage, marine economy associated with the protection of sovereignty over sea and islands.