MID TERM REPORT major macroeconomics 2 vietnams monetary policy during covid 19

FOREIGN TRADE UNIVERSITY FACULTY OF INTERNATIONAL ECONOMICS o0o MID-TERM REPORT Major: Macroeconomics Vietnam's Monetary Policy During Covid-19 LECTURER: Hồ Thị Hoài Thương Lê Phan Thùy Linh CLASS: K59CLC4 - GROUP 11 Nguyễn Bảo Nhiên Nguyễn Phương Nam MEMBER LIST Phạm Trần Trúc Mai Cao Thị Yến Linh 2011155284 2011155435 2011156082 2011156077 2011155280 Ho Chi Minh City, March 7th 2022 download by : skknchat@gmail.com TABLE OF CONTENTS INTRODUCTION 1 Rationale of research Aims and objectives Scope of research Research method Structure of research CHAPTER 1: THEORETICAL FRAMEWORK 1.1 Definition of monetary policy 1.2 Objectives 1.2.1 Inflation 1.2.2 Unemployment 1.2.3 Currency Exchange Rates 1.3 Types of monetary policy 1.3.1 Expansionary Monetary Policy 1.3.2 Contractionary Monetary Policy 1.4 Monetary policy tools of SBV .4 1.4.1 Re-financing 1.4.2 Interest rates 1.4.3 Exchange rates 1.4.4 Reserve requirements 1.4.5 Open market operations 1.4.6 Other tools CHAPTER 2: COVID-19 CURRENT SITUATIONS AND ITS IMPACTS ON VIETNAM’S ECONOMY 2.1 Current situations in Vietnam download by : skknchat@gmail.com 2.1.1 Total cases and deaths from current community outbreak 2.1.2 Vaccine supply and vaccination rate 2.2 Effects of Covid-19 on Vietnam’s economy 2.2.1 From January 2020 to April 2021: The third three waves 2.2.2 May 2021 to present: The fourth wave 10 CHAPTER 3: VIETNAM’S MONETARY POLICY DURING COVID-19 13 3.1 SBV’s orientations of the monetary policy management 13 3.1.1 Overall goal and mission 13 3.1.2 Specific tasks 13 3.2 Monetary policy taken by SBV 14 3.2.1 Reducing interest rates 14 3.2.2 Promoting credit growth 15 3.2.3 Rescheduling debt 15 3.2.4 Other measures 16 CHAPTER 4: EVALUATION AND SUGGESTIONS FOR VIETNAM’S MONETARY POLICY 18 4.1 Evaluation of monetary policy taken by Vietnam 18 4.1.1 Effectiveness 18 4.1.2 Limitations 19 4.2 Suggestions 20 CONCLUSION 21 download by : skknchat@gmail.com Abbreviation ABBREVIATIONS BOT Explanation BT Build-operation-transfer FDI Build-transfer GDP Foreign Direct Investment NPL Gross Domestic Product SBV Non-performing loan VBSP The State Bank of Vietnam Vietnam Bank for social policies download by : skknchat@gmail.com LIST OF FIGURES Figure 2-1 – Total coronavirus cases in Vietnam from February 15, 2020 to March 8, 2022 Figure 2-2 - Total coronavirus deaths in Vietnam from February 15, 2020 to March 8, 2022 Figure 2-3 – GDP annual growth rate in Vietnam from 2016 to 2021 Figure 2-4 – Share of three sectors in Vietnam’s economy in 2020 Figure 2-5 – Share of three sectors in Vietnam’s economy in 2021 11 Figure 4-1 – CPI average growth rate from 2016 to 2021 18 download by : skknchat@gmail.com INTRODUCTION Rationale of research Monetary policy is a critical macroeconomic regulatory policy of the state in a market economy because it has a large influence on macro variables such as employment, economic growth, inflation, and so on Monetary policy tools play a critical and decisive role in achieving its objectives Since Vietnam's reform until now, monetary policy and its tools have gradually been formed, perfected, and implemented in the socialist-oriented market economy With the characteristics of the Vietnamese economy, the choice of monetary instruments and methods to be used in each specific period is something that must be closely monitored National monetary policymakers and operators, as well as economic researchers, must comprehend the situation and provide timely and appropriate solutions From the beginning of 2020 until now, the Covid-19 pandemic has had a significant impact on Vietnam's economy, both in the short-term and medium-term This is viewed as a challenge for a fledgling economy When confronted with these issues, the government must implement appropriate policies and strategies in order to overcome obstacles and restore economic stability Because of its high theoretical and practical significance, monetary policy is regarded as an effective policy to research for implementation For the aforementioned reasons, the topic "Vietnam's Monetary Policy During Covid-19" is being researched in the hope of presenting the economic realities of Vietnam in the context of the pandemic, as well as analyzing the impact of monetary policy, from which specific directions to overcome difficulties and capitalize on opportunities to return Vietnam's economy to stable growth can be given Aims and objectives The overall goal of this study is to clarify the characteristics, tools, and impacts of monetary policy, followed by a summary of the epidemic situation in Vietnam, and then analyze the monetary policies applied by Vietnam to the economy during the COVID-19 epidemic From there, the research group shows the impact of those policies and evaluates their effectiveness The research group then shows the impact of those policies download by : skknchat@gmail.com and evaluates their effectiveness Based on this, the research group will propose future solutions for Vietnam's monetary policy Scope of research Geographic Scope The study will have an overview of the monetary policy, from thence it will go into details about the covid pandemic in Vietnam and the impact of monetary policy on the Vietnamese economy during that time Time Range Research on Vietnam's economy from the time the pandemic took place in 2020 to the current time (2022) Research method - Methods of data collection: Secondary data is needed to serve the topic collected from sources: websites, and especially the national statistics reports and other calculating reports - Methods of synthesis and analysis: The research uses a system of methods economic statistics, data collection and analysis - Synthesize data: Use a disaggregation method to systematize the collected data collected in accordance with the purpose of the research - Data analysis: Applying the methods of economic and statistical analysis collect and analyze the collected data Structure of research The research consists of chapters: - Chapter 1: Theoretical framework - Chapter 2: Covid-19 current situations and its impacts on Vietnam’s economy - Chapter 3: Vietnam’s monetary policy to control the inflation during the covid-19 - Chapter 4: Evaluation and lessons from the monetary policy download by : skknchat@gmail.com CHAPTER 1: THEORETICAL FRAMEWORK 1.1 Definition of monetary policy Monetary policy is the macroeconomic policy laid down by the central bank It involves the management of money supply and interest rate and is the demand side economic policy used by the government of a country to achieve macroeconomic objectives like inflation, consumption, growth, and liquidity 1.2 Objectives The primary objectives of monetary policies are the management of inflation or unemployment, and maintenance of currency exchange rates 1.2.1 Inflation Monetary policies can target inflation levels A low level of inflation is considered to be healthy for the economy If inflation is high, a contractionary policy can address this issue 1.2.2 Unemployment Monetary policies can influence the level of unemployment in the economy For example, an expansionary monetary policy generally decreases unemployment because the higher money supply stimulates business activities that lead to the expansion of the job market 1.2.3 Currency Exchange Rates Using its fiscal authority, a central bank can regulate the exchange rates between domestic and foreign currencies For example, the central bank may increase the money supply by issuing more currency In such a case, the domestic currency becomes cheaper relative to its foreign counterparts 1.3 Types of monetary policy Depending on its objectives, monetary policies can be expansionary or contractionary 1.3.1 Expansionary Monetary Policy This monetary policy aims to increase the money supply in the economy by decreasing interest rates, purchasing government securities by central banks, and lowering the reserve requirements for banks An expansionary policy lowers download by : skknchat@gmail.com ... outbreak 2. 1 .2 Vaccine supply and vaccination rate 2. 2 Effects of Covid- 19 on Vietnam’s economy 2. 2.1 From January 20 20 to April 20 21: The third three waves 2. 2 .2 May 20 21 to... additional dose and 23 , 628 ,334 people who fully vaccinated got booster dose (24 .1% of total population) 2. 2 Effects of Covid- 19 on Vietnam’s economy 2. 2.1 From January 20 20 to April 20 21: The third... Figure 2- 1 – Total coronavirus cases in Vietnam from February 15, 20 20 to March 8, 20 22 Figure 2- 2 - Total coronavirus deaths in Vietnam from February 15, 20 20 to March 8, 20 22