Hanoi (VNA) - Most economic and financial indicators continue todemonstrate Vietnam’s resilience, according to the Vietnam Macro Monitoring report for September of the World Bank (WB).

The report said that the COVID-19outbreak in Da Nang has been brought under control by the local authorities, whichrestricted mobility in a targeted manner and increased other mitigatingmeasures. This targeted approach has affected the economy less than the Aprilnation-wide lockdown, it said.

According to the WB, mosteconomic and financial indicators continued to demonstrate Vietnam’sresilience, but the domestic rebound moderated in August, partly as the resultof the COVID-19 outbreak in Da Nang.

It noted that exports continuedto perform well despite international headwinds, while FDI inflows slowedsignificantly. Therefore, the WB suggested that attention should be paid todomestic and foreign investors who may postpone their plans in the currentuncertain environment as well as the government’s response, which needs tostimulate the recovery in the short term and preserve fiscal and debtsustainability in the longer term.

The report cited statistics ofthe General Statistics Office (GSO) that showed in the first eight months ofthe year, budget revenues reached 58.3 percent of estimated collections – down 12.4percent year on year – due to the economic slowdown and deferred taxes forbusinesses and individuals designed to support economic recovery. Concurrently,public expenditure was 8.2 percent higher than during the same period in 2019,reflecting fiscal accommodations to support economic recovery.

In line with the objective toaccelerate the execution of the public investment programme, capitalexpenditure increased to 221.7 trillion VND in the first eight months of 2020,up 41.4 percent compared to the same period in 2019.

The domestic economy expanded inAugust but at a slower rate than in July and significantly below the ratesrecorded a year ago. Industrial production (NSA) grew by 2.1 percent (year onyear) in August, compared to 4.0 percent in July. Growth of retail sales ofgoods and services (SA) slowed to 2.3 percent year on year in August comparedto 5.2 percent in July.

In August, Vietnam’s exportperformance remained resilient, growing 1.42 percent month on month, but FDIinflows moderated significantly as they reached about 720 million USD in Augustcompared to 3.1 billion USD in July. Overall, Vietnam received 19.5 billion USDin FDI during the first eight months of 2020, a 14 percent decline compared tothe same period in 2019.

Inflation remained subdued at 3.2percent year on year in August, slightly lower than in recent months due to thestability of food prices. Credit growth continued to moderate at 9.4 percentyear on year in July, reflecting the decline in economic activity despite theState Bank of Vietnam (SBV)’s policy of reducing interest rates and encouragingcommercial credit.

At the end of August, the levelof international reserves held by the SBV was equal to 92 billion USD, up from80 billion USD at the end of December. While this increase was not as rapid asthat reported for the same period in 2019, it demonstrates the resilience ofVietnam’s economy, which reached a record-high merchandise trade surplus andattracted substantial FDI despite the pandemic, the report said.

This performance helped mitigatethe impact of lower remittances and foreign exchange earnings from foreignvisitors, according to the report. Meanwhile, the resilience of Vietnam’sbalance of payments was corroborated by the stability of the value of the localcurrency compared to the US dollar.

Looking ahead, the pace ofeconomic recovery will depend on how well domestic demand recovers in the wakeof the Da Nang outbreak. Greater attention should be paid to the impacts of thecrisis and on fiscal and financial stability in the medium to longer terms, andto policies designed to address them, the report suggested./.