EU trade pact to support Vietnam's coronavirus recovery: World Bank

European Union and Vietnamese flags are seen at the signing ceremony of EU-Vietnam Free Trade Agreement at the government office in Hanoi, Vietnam June 30, 2019. REUTERS/Kham

HANOI (Reuters) - A free trade agreement with the European Union set to soon be ratified by Vietnam should boost the Asian nation’s economic recovery from the coronavirus pandemic, the World Bank said on Tuesday, while urging faster reforms.

Vietnam’s legislature is expected to give its final approval later this month for a deal that would see tariff reductions on 99% of goods traded with the bloc, its second-largest export market after the United States.

Its trade minister has said he expects the agreement to take effect in July.

Vietnam’s economy grew at its slowest pace in the first quarter of this year, 3.8%, as the coronavirus outbreak hit output. But with just 324 cases and no deaths, Vietnam is set to resume economic activity sooner than its regional peers.

The European Union-Vietnam Free Trade Agreement (EVFTA) could boost Vietnam’s GDP and exports by 2.4% and 12% respectively over the next decade and lift hundreds of thousands of people out of poverty, the World Bank said in a report.

“Such benefits are particularly urgent to lock in positive economic gains as the country responds to the COVID-19 pandemic,” the bank said.

It said now was the perfect time for Vietnam to initiate deeper reforms and fix legal gaps and implementation issues to reap the full benefits of the agreement.

Reporting by Khanh Vu; Editing by Martin Petty