Vietnam braces for GDP fall as COVID squeezes economy
Plastic sheet dividers minimize physical interaction between store workers and shoppers at a wet market in Hanoi on Sept. 21. Vietnam’s big cities have taken steps to reverse the spread of the COVID-19, but with limited success. © Getty Images
HANOI — Vietnam’s economy in the July-September quarter may have recorded less than 2% growth, underperforming the same quarter a year ago. A strict COVID-19 lockdown squeezed the country’s southern commercial hub Ho Chi Minh City, putting pressure on the government to give up its goal of 6.5% growth for the year.
The economy, once praised for its effective response early in the pandemic, is now struggling to emerge from a wave of infections. The impact could continue to weigh on growth beyond the third quarter unless the country manages to accelerate its vaccination drive, experts warn.
Hanoi is expected to announce the third quarter figures by the end of this month.
“We expect gross domestic product growth in the third quarter to have slowed to 1.9% year-on-year, from 6.6% in the second quarter, as the pandemic hit the economy,” Tim Leelahaphan, Economist for Thailand and Vietnam at Standard Chartered, told Nikkei Asia.
Ho Chi Minh City-based SSI Securities said Vietnam might have experienced a pullback in the third quarter, with a possible reduction of 0.8 to 1% from the same quarter a year ago when the economy grew at a 2.69% pace.
“We forecast 3Q21 GDP growth at -1.2% year-on-year before rebounding to 5.7% in 4Q21,” Hanoi-based VNDIRECT Securities said in the report issued on Sept. 13, painting an even darker picture.
In the capital, meanwhile, a strict lockdown has closed factories, shops and services on a citywide and provincial scale, causing major damage to the economy, Vietnamese economist Le Dang Doanh said.
For foreign multinationals, “moving to another country will take time as they have invested a lot of money in Vietnam, and also enjoyed benefit from their investment, but the government needs to promptly respond and dialogue directly with both domestic enterprises and foreign investors,” he added.
A government official acknowledged the need to expand vaccinations.
“The global economy is on the mend with recovering demand in foreign markets. Vietnam, however, has seen its production capacity and business resilience weakening immensely following prolonged restrictions,” Nguyen Duc Kien, head of the prime minister’s Economic Advisory Council, told the Sai Gon Giai Phong newspaper. “Vietnam must accelerate approval of homegrown vaccines and soon put them into use.”
News Credit: asia.nikkei.com
Latest in asia.nikkei.com. Please visit the source: https://asia.nikkei.com/Spotlight/Coronavirus/Vietnam-braces-for-GDP-fall-as-COVID-squeezes-economy