Vietnam is not considering an economic stimulus package at the moment as the outbreak of the new coronavirus (nCoV) in the country is under control, according to Mai Tien Dung, Minister of the Government Office.

Mai Tien Dung, Minister of the Government Office at the press conference. Source: VGP.

This is, however, a solution in case the outbreak leads to severe consequences, said Dung at a monthly press briefing on February 5.

Last Sunday, Bloomberg reported the People’s Bank of China announced a US$22-billion injection into Chinese markets to prevent the country’s stocks and currency falling, while other regulators also took a slew of measures to shore up their financial markets amid the nCoV outbreak.

Regarding this issue, Vice Minister of Planning and Investment Tran Quoc Phuong said a stimulus package is among a number of solutions to mitigate the impacts of the epidemic to economic growth.

Such a package would depends on the resources at disposal and who should receive the support, Phuong stated. 

Phuong added the Ministry of Planning and Investment (MPI) proposed two sets of solutions, including (1) prioritizing resources to prevent and control the ongoing outbreak as it is still at early stage; (2) measures to recover production and businesses right after the outbreak is contained.

Other measures consist of speeding up the disbursement process of public investment, Phuong stated, adding with more favorable policies, the efficiency would depend on the ministries, provinces and cities.

Phuong urged provinces to finalize administrative procedures for speedy operation of new projects, in turn contributing to economic growth.

In terms of potential impacts of nCoV on Vietnam’s economic growth, the MPI drew up two scenarios.

In the first scenario, if the nCoV outbreak is contained right in the first quarter, Vietnam’s GDP growth in 2020 would be around 6.27% year-on-year. However, in case the epidemic persists to the second quarter, the GDP is predicted to grow only 6.09%.

Phuong said these are purely estimated figures, while the actual GDP growth rates would depend on the progress of the outbreak and efficient state management.

Minister Dung reiterated Prime Minister Nguyen Xuan Phuc’s stance that despite the impacts of the outbreak on the economy, the government would not revise down the growth target of 6.8% for this year.

A report from HSBC on February 3 revealed in case China’s GDP growth declines by two percentage points in the first quarter and then recovers, Vietnam’s economic growth would fall by nearly 0.25 percentage points due to a slowdown in exports.

Bao Viet Securities Company forecasts Vietnam's GDP will grow by about 6.5% year-on-year in the first quarter of 2020, 0.2-0.4 percentage points lower than the same period in 2019.

Meanwhile, Viet Dragon Securities Company offered a less optimistic view with GDP growth projected to slow to 6 – 6.3% year-on-year in the period.