Due to severe impacts of the Covid-19 pandemic on the economy, the Vietnamese government has proposed revising the GDP growth target from the initial 6.8% to 4.5% for this year, according to Minister of Planning and Investment Nguyen Chi Dung.

Overview of the meeting. Source: Quochoi.vn.

In case the global economy becomes more favorable, Vietnam can expect its economy to grow 5.4%, Dung said at a hearing held by the Standing Committee of the National Assembly on May 15.

A lower GDP growth target is inevitable as the pandemic is ravaging the world economy. However, a 5.4% growth rate would still help Vietnam ensure its average GDP growth during the 2016 – 2020 period at 6.5%, Dung added.

Additionally, Dung said the consumer price index (CPI) target remains unchanged at 4%, while export growth is revised to 4%, three percentage points lower than the target set by the National Assembly last November.

The pandemic could also lead to a decline of VND163 trillion (US$6.97 billion) in state budget revenue compared to the year’s estimate, causing a fiscal deficit to widen by 1.31 percentage points against the target to 4.75% of GDP.

Public debt could rise to 55.5% of the GDP, representing an increase of 3.2 percentage points compared to the target.

Minister of Plannning and Investment Nguyen Chi Dung at the meeting. Source: Quochoi.vn.

The government devised two growth scenarios for 2020. In the first one when Vietnam is able to contain the pandemic in the second half of April and the country’s major trade partners reopen their economies in the third quarter, the GDP growth is set in a range of 4.4 – 5.2% year-on-year, (1.6 – 2.4 percentage points lower than the 6.8% target).

For the second scenario, if Vietnam’s major trade partners could only recover by the fourth quarter, Vietnam’s economy would expand by 3.6 – 4.4% year-on-year.

National Assembly Vice Chairman Phung Quoc Hien said while the global situation remains complicated, Vietnam’s economy, with high level of openness, should be prepared for even worse scenarios for appropriate measures.

Chairwoman of the National Assembly Nguyen Thi Kim Ngan said it is clear the current growth target is not attainable, but the government should strive its best for the highest results possible.