According to the data from the General Statistical Office, the gross domestic product (GDP) in the first quarter of 2020 increased by 3.82 percent over the same period last year, the lowest in the last 10 years, as the Covid-19 pandemic has been affecting almost sectors.
In a recently released report, Vietcombank Securities Company (VCBS) forecasts that GDP in the second quarter will increase by 3.5 percent 3.7 percent due to interrupted business and production activities and consumption demand which are adversely impacted by the disease.
However, with the Vietnamese government’s drastic action in the prevention and control of the disease and in support of the economy, VCBS expects Vietnam’s GDP to recover from the fourth quarter, thus, the growth in 2020 can reach 4.4 percent 4.9%.
Regarding credit growth, VCBS stated that due to the impact of the Covid-19, production and business activities were interrupted, facing with many difficulties and challenges, which led to a slow increase in credit demand in the first quarter of 2020, the lowest level recorded in six years.
In the context of complicated movements of the disease, this securities company said that credit growth was unlikely to be improved in the second quarter.
Although GDP growth as well as credit growth were difficult, in return, inflation had the prospect of fulfilling the government’s goal set earlier this year (below four percent).
VCBS expects Vietnam’s inflation in 2020 will be controlled at 3.4-3.9 percent thanks to the active implementation of many synchronous solutions to prevent the Covid-19 epidemic and stabilise the market.
It is known that in the first quarter of 2020, the average consumer price index grew by 5.56%, mainly due to the increasing demand for foodstuffs.
Another positive point in 2020 can be noted as the stability of the exchange rate. Accordingly, despite the fact that investors and other participants of the market look for safe assets and US dollar is considered one of such assets. VCBS shares that with the existing resources and the clear direction of administration, the State Bank of Vietnam (SBV) can keep the central exchange rate down by one percent for 2020 significantly lower than other countries in the region.
This securities company fluctuated sharply in the second half of the first quarter of 2020, which is consider as timing matter. The fact that the government has been controlling and preventing the disease quite closely will create a more positive belief for members in the market, as well as expectation to keep the cash flow of investment. At the same time, Vietnam is still considered as a destination to attract Foreign Direct Investment (FDI) and Foreign Indirect Investment (FII). In addition to abundant foreign exchange reserves, the exchange rate is forecasted by VCBS to be less volatile this year.
