Vietnam’s economic growth is likely to bounce back to 5.5-7% in the second half of this year (2H20) after touching a years-low of 1.81% in the first half, meaning that the government’s 6.8% growth target set for this year is a ‘tall order,’ Singapore-based UOB has said in a note.

The bank’s analysts said that the rebound in 2H20 is likely given the country has emerged from lockdowns earlier than many of its neighbors and the dynamism of its economy. This also assumes there is no major second wave of infections that would shut down global trade activities.

Despite impact from the Covid-19 pandemic, Vietnam’s economy managed to expand 0.36% y/y in 2Q20, but with a sharp deceleration from 3.68% in 1Q20, as activities likely to have experienced the worst of the impact from the pandemic.

The bank has also trimmed their 2020 forecast to 3.5%, from 5.2% made earlier given the sharply weaker second-quarter (2Q) data and a weakened base in 1H20.

The International Monetary Fund (IMF) earlier projected that Vietnam's economic growth will slow to 2.7% in 2020, the second highest rate in the world. However, Prime Minster Nguyen Xuan Phuc is more optimistic and said his government will try to keep growth above 5%.

Vietnam’s National Assembly voted on June 16, 2020 not to amend the year’s socioeconomic targets, including the 6.8% GDP growth target, despite Covid-19 impacts.

While Vietnam has been highly lauded for its disciplined handling against the Covid-19 pandemic, resulting in zero death from the disease so far, and earning a praise from World Bank, the external environment is far more difficult to overcome. Concerns about second wave of infections continue to plague Vietnam’s key markets of the US and, to a certain extent Europe, making demand recovery a great uncertainty, UOB said in the note.