Vietnam's growth in 2020 projected to hit 3.8% in optimistic scenario

But the pandemic's continued impact on major global economic and financial centres will dampen the demand for Vietnamese goods, said the Vietnam Institute for Economic and Policy Research (VEPR).

It added that the coronavirus will also slash the number of foreign tourists to Vietnam, hurting the local hospitality industry.

In a less rosy projection, whereby coronavirus infections rise again strongly in global economic centres, Vietnam's economy is forecast to grow by only 2.2%, despite the virus remaining in check at home.

In this scenario, many countries will have to extend their lockdowns into the fourth quarter, thereby seriously affecting Vietnam's exports, which would in turn result in a slowdown in manufacturing and a contraction in supporting sectors.

In its report released on July 21, the VEPR made a number of policy proposals, including reducing tax and fees and deferring tax payments, which it said are more effective than providing direct support or rescue.

VEPR Director Pham The Anh stated that support policies should be selective, with the reduction of financial costs, such as loan interest and land rent, applying to companies forced out of business.

In the meantime, affected enterprises that are still in operation should be supported though a policy of delaying social insurance contributions, reducing land rent and loan interest, and deferring loan payments and VAT tax.

For those little or barely affected, the government should provide credit incentives and a favourable environment for their growth since they are the pillars of the economy at this time, said Anh.

(Source: NDO)