Efforts to stimulate domestic growth

(ĐTTCO) - The International Monetary Fund (IMF) forecasts that Vietnam's economic growth for the whole year 2020 will be only 2.7%, and the General Department of Statistics has announced that results of the first six months were the lowest in ten years.

Efforts to stimulate domestic growth

In order to improve this situation, the Ministry of Industry and Trade has organized a program called "Vietnam Grand Sale 2020" to run during the month of July, in a serious effort to stimulate domestic purchasing power across the country.

This is the very first national scale stimulus program organized under Decision 1635 /QD-BCT dated 19 June 2020 by the Ministry of Industry and Trade. Accordingly, from 1 July to 31 July 2020, a maximum limit for the value of goods and services will be set and a maximum discount rate for promoted goods and services will be as much as 100%.

Slump in consumer spending

This program, designed by the Ministry of Industry and Trade will provide a ray of hope for entire markets nationwide, and will help in invigorating the purchasing power among individuals after a depressed phase and slump in buying during the Covid-19 pandemic. The drastic effects to the Vietnamese economy are clearly visible from the socio-economic situation report for the first six months of 2020 and the second quarter of 2020, published by the General Statistics Office.

Although now Vietnam has presented a formidable image to the world with its excellent and effective containment of the Covid-19 pandemic, it is Vietnam's GDP that has been seriously affected and needs attention. In the first six months of the year, GDP growth was only 1.81%, the lowest in the last ten years, and in the second quarter GDP growth was near zero, reaching just 0.36%, compared to last year which was 6.73%.

GDP in the first six months reached VND 2,576,500 bn, a worrisome figure that shows the total demand is located in domestic goods and services. Because of a trade balance in the first six months, Vietnam still saw a trade surplus of USD 4 bn, but the total value of retail sold goods and consumer service revenue was only VND 2,380,800 bn. Demand for domestic goods fell because households preferred to save money, and also because international visitors to Vietnam dropped by 55.8% over this period. Prior to the pandemic, retail growth in Vietnam had always maintained a growth of 9% in volume and more than 10% in value.

Hence in July, consumers nationwide will enjoy many preferential products and services at huge promotional discounts of 100%, instead of only 50% under current regulations. The national stimulus program is the right solution to lift up an all-time low in sales domestically, as demand will increase when consumers respond to incentives.

IMF affirms faith in Vietnam

According to IMF calculations on 29 June, Vietnam has a better chance of recovery in production and retail than the whole ASEAN region, but will still be much lower than before the Covid-19 pandemic. The IMF has forecast Vietnam's economic growth for the whole year of 2020 to be at only 2.7%, as an inevitable impact due to effects of the pandemic.

The IMF said that Vietnam's economy was the least affected compared to most other countries in the region, and the prospects are of a bright recovery when Vietnam's economy completely reopens and Vietnam's international trading partners also recover. The IMF also said that Vietnam had the most rapid reaction to containing the pandemic and the key to Vietnam's success came from good communication, multimedia contact, strengthening of public confidence, helping the whole society to comply in fighting the pandemic collectively, and deploying preventive measures effectively.

Though many domestic and foreign organizations have made pessimistic forecasts for the next six months of 2020, Vietnam’s national program "Vietnam Grand Sale 2020" is expected to bring significant improvement to the domestic market and help increase the total demand for domestic goods and services after July. The new program will immediately clear bottlenecks in the economy in these difficult times. Both the General Statistics Office and the IMF have pointed out that Vietnam is well equipped to make a good economic recovery in the post-pandemic period.

Đinh Hạ Vân

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