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The domestic economy is expected to recover faster in the fourth quarter


According to Analysis Division, VNDIRECT Securities Joint Stock Company, the domestic economy will recover faster in the fourth quarter.

According to VNDIRECT, the service sector still grew by 2.8% over the same period in the third quarter of 2020, significantly improved compared with the decrease of 1.9% in the second quarter of 2020.

After the second Covid-19 wave was brought under control, the service sector showed positive signs of recovery, with total retail sales of consumer goods and services in September 2020 increased by 5.0% over the same period.

According to VNDIRECT, the service sector will maintain the recovery trend in the fourth quarter of 2020, thereby promoting the recovery of the economy. Besides, Vietnam's Purchasing Managers' Index (PMI) in September 2020 reached 52.2 points, which is the highest level since July 2019, signaling a faster recovery of manufacturing industry in quarter 4/2020.

Also according to VNDIRECT, inflation is well controlled. Specifically, inflation in September 2020 increased by 3.0% over the same period (compared to 3.2% in August). Compared to the previous month, the consumer price index (CPI) increased only slightly by 0.1% due to the increase of the education group (increased by 2.1% compared to the previous month) offset by the drop of the food price index (decreased by 0.3% over the previous month), and the price index of the cultural and entertainment group (decreased by 0.2% from the previous month).

VNDIRECT also lowered the GDP growth forecast to 2.8% in the base scenario. Specifically, because GDP growth in Q3/2020 was lower than expected by VNDIRECT, and the industrial sector faced greater difficulties due to the negative impact of the second Covid-19 wave in the world, accordingly, VNDIRECT adjusted the GDP growth forecast for 2020 to 2.8% in the base scenario (from 3.5% previously).

VNDIRECT maintains a positive assessment of Vietnam's economic outlook in the medium term thanks to the benefits from external demand recovery in the post Covid-19 period and the trend of moving factories from China to Vietnam.


Kylie Nguyen

© 2019 Vietnam Bank for Agriculture and Rural Development No. 2 Lang Ha street, Ba Dinh district, Hanoi, Vietnam
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