Stronger Headwinds Bring New Challenges for the Government
With rising global health and economic concerns, Vietnam economy is expected to be significantly affected, even though the COVID 19 health crisis has been so far contained, with only 240 cases of infected people and no registered death as of early...
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| Format: | Policy Note |
| Language: | English |
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World Bank, Washington, DC
2020
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| Online Access: | http://documents.worldbank.org/curated/en/698671589882858003/Stronger-Headwinds-Bring-New-Challenges-for-the-Government http://hdl.handle.net/10986/33780 |
| Summary: | With rising global health and economic
concerns, Vietnam economy is expected to be significantly
affected, even though the COVID 19 health crisis has been so
far contained, with only 240 cases of infected people and no
registered death as of early April. The World Bank’s GDP
growth forecast for Vietnam has been cut by half compared to
pre-crisis projections, with new forecast at 3.0 percent in
2020. Both the fiscal and external accounts are expected to
deteriorate, creating a fiscal financing gap of
approximately 5 billion dollars that will require new
borrowings. The Government’s fiscal response, a combination
of tax and social protection measures, is expected to
attenuate the short-term economic costs associated to the
COVID 19 pandemic, but the key challenges will be the rapid
and effective implementation of the above measures and
preparing the economy for the expected rebound when the
health crisis is contained. Easing monetary and credit
policies creates a welcome buffer to the affected
businesses, but close monitoring is required as banks become
increasingly exposed to the economic slowdown, affecting
their asset quality, liability, and profitability over time.
Potential areas for collaboration between the Government and
the World Bank could include (i) macro and fiscal
monitoring; (ii) implementation of social protection
measures; and (iii) reforms to be implemented for optimizing
the rebound of the economy. |
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