The service sector that makes up a high proportion of the economy has suffered the most.

GDP saw a modest growth rate of 3.82 percent in Q1, a decrease of nearly 50 percent compared with the same period last year. The industrial production index was also equal to half of that of 2018.

Vu Thanh Tu Anh from the Fulbright School of Public Policy and Management,

The export growth rate was just 0.5 percent, a record low, while the import growth rate was minus 2 percent. The figures show that enterprises are running out of input materials for production.

Vietnam has been warned that the export growth rate will be even lower in Q2 as Covid-19 has affected large economies, Vietnam’s largest export markets.

Businesses, the pillars of the economy, have been shocked by Covid-19. The number of new businesses has increased by 4.4 percent, but capital and labor force has decreased.The number of businesses suspending operation or waiting for dissolution procedures has increased by 26 percent.

The major goal, according to Vu Thanh Tu Anh from the Fulbright School of Public Policy and Management, is preserving people's lives and businesses in order to quickly recover after the epidemic.

Anh warned that if the government cannot make effective and timely intervention, some business fields and many enterprises will go bankrupt, leading to serious consequences in growth, jobs and other social problems.

The government needs to respond as quickly and effectively as possible, with all resources, to prevent the medical crisis from turning into an economic crisis, or even a financial and public debt crisis.

“Do not try to obtain high GDP growth rate at any cost and neglect the task of fighting against the epidemic. Keeping high growth rate is not the optimal goal right now,” Anh said, adding that Vietnam will have to pay a high price if it stops preventive measures too soon.

Therefore, the government’s policies to cope with Covid-19 need to target the most important issues – flattening the curve, protecting businesses’ health, reinforcing society’s confidence, consolidating foundation for recovery, and mitigating consequences.

Of these, ‘consolidating foundation for recovery’ and ‘mitigating consequences’ are the most important tasks, because Vietnam needs to prepare well for the post-crisis period.

Anh mentioned three major policies to cope with Covid-19.

Regarding fiscal policy, the most important public expenditure is on healthcare and epidemic prevention. If the medical shock cannot be stopped, economic shock will come.

It is necessary to apply policies on tax exemption and reduction, and tax payment deadline extensions.

Regarding public investment, the government’s policies should have two goals – stimulating the economy and fosteringr' capacity for the recovery period.

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