GDP growth forecast upgraded after early lockdown ease

In its recent report, the economic think tank has revised the country’s economy growth forecast from its previous report of 4.2 percent issued early April thanks to the early easing of social distancing restrictions in Vietnam.

The country eased social distancing measures on April 22 and resumed most economic activities since early May.

The institute also provided two other scenarios. Vietnam’s economic growth for the year could be 3.9 percent in the neutral scenario and 1.7 percent in the worst scenario.

VEPR said the revision followed Vietnam’s successful containment of Covid-19 in late April and reboot of economic activities as the world eased lockdown measures since earlier this month, allowing Vietnam's export industry to rebound in the second half of 2020.

In case the pandemic reemerges across global economic and financial centers, major economies would have to extend lockdown until the third or even the fourth quarter, severely affecting agriculture, forestry and fishery, manufacturing and processing, as well as services.

The research team pointed out factors that could support Vietnam's economic growth for the rest of the year, including the ratification of the EU-Vietnam Free Trade Agreement (EVFTA) and the EU-Vietnam Investment Protection Agreement, which were approved by Vietnam's National Assembly earlier this month. Both agreements will possibly take effect in August.

Vietnam recorded decade low GDP growth of 3.82 percent in the first quarter as the novel coronavirus outbreak crippled key industries like tourism, hospitality and aviation.

Last year, GDP growth hit 7.02 percent, the second highest growth figure in the last decade, after a record 7.08 percent in 2018.