The economy in 2021 has to face unprecedented
challenges and enormous difficulties due to the widespread COVID-19. Both
contagion and death rates are increasing in most provinces while the
vaccination rate is still low, leading to social distancing for a long time.
This situation dramatically impacts the residents’ health and all sectors of
society.
The residents’ income and
consumption decrease sharply due to the outbreak of disease and wide social
distancing. Additionally, production of the important sectors like logistics,
tourism, education, manufacturing industry, etc suffers from a huge decline in
demand and increase in production cost.
Extreme and inconsistent epidemic prevention measures among different
localities also enormously affect logistics costs, disrupt the supply chain,
and so on.
Furthermore, the risk from
macroeconomic and financial instability is increasing. The expected inflation goes
up because of cost-push and prolonged monetary easing. Whereas, it is difficult
to increase the Government budget due to the rise in budget expenditure on
economic stimulus packages, limited fiscal space, economic decline and
significant adjustment of the asset market. Although monetary supply and credit
growths in 2021 are lower not too much than that in 2020 (excluding the strong
increase in corporate bond issuance), economic growth in 2021 reaches 2.58%
which is the lowest rate in the last two decades. There is doubt about the
ultimate destination and/or the efficiency of cash/credit flow in the economy.
Credit, in various ways, may not directly go into production but go into the
asset market (real estate, stocks and gold), hence the risk of an asset bubble
is evident. It is alarming that the M2/GDP and credit to GDP ratio of Vietnam are
200% and 150% respectively, surpassing the rate of other countries in the
ASEAN-5 region. Besides, the Central Bank has loosened the regulations on
safety in order to support the system and the economy to cope with the
epidemic. After a long time of decline, bad debt is arising. Eventually, the
financial sector may be faced with problems as same as the real sector. The
difficulties of businesses may cause a debt crisis, leading to breakdowns in
the financial system.
In short, Vietnam’s macroeconomy and
financial system are faced with many instability risks, which makes the
response to the epidemic and economic recovery become more difficult.
Therefore, overall economic assessment and situation of macroeconomic
stabilization in 2021 are the sound basis for policy recommendations for
stabilizing the macroeconomy and financial system in the context of the
COVID-19 pandemic, contributing to economic recovery and development. The
National Economics University in collaboration with the Central Economic
Committee, Economic Committee of the National Assembly co-organises the
national conference “Vietnam’s economic overview 2021 and outlook
2022: Stabilizing macroeconomy in the context of the Covid-19”. This is
the annual conference and is one of the most important events at NEU.
Time : 08:00, Monday, 25 April 2022
Venue: Grand Hall, A2 Building, National Economics University, 207 Giai Phong, Hai Ba
Trung, Hanoi
We
are honoured to invite you to take part in and share your opinion at the
conference.