Economic rebound still outwith reach

Asteep decline in business confidence is expected to contribute to a drop in economic growth this year, but the Vietnamese economy is projected to rebound significantly next year

thanks to a surge in domestic production after the coronavirus pandemic.

1490p3 economic rebound still outwith reach
Vietnam is getting back to work, but businesses must be wary of a second outbreak wave, Photo: Le Toan

The General Statistics Office (GSO) last week reported that in the first four months of 2020 there were 37,600 newly-established enterprises, with total registered capital of VND445.2 trillion ($19.36 billion), down 13.2 per cent in the number of enterprises and 18 per cent in capital.

Some 11,700 operational businesses also increased their capital by VND680.9 trillion ($29.6 billion), raising total registered capital in the economy in the first four months of 2020 to $48.96 billion, down 20.4 per cent on-year.

Notably, the number of enterprises with halted operation hit 22,700, up 33.6 per cent on-year.

The GSO said never has the economy witnessed such a dim picture for enterprises’ performance in a four-month period of a year as it is doing now.

“This will have bad impacts on the economy’s growth this year,” said GSO head Nguyen Bich Lam.

Under a recent scenario by the Ministry of Planning and Investment, if COVID-19 ends in the second quarter of 2020, GDP will likely grow 5.56 per cent this year, and the rate will likely be 5.39 per cent if the pandemic ends in the third quarter of the year.

In the first quarter, the rate was only 3.82 per cent on-year.

However, John Walsh, programme manager for international business of RMIT Vietnam School of Business and Management, said it is difficult to be certain about the economy outlook because so many elements of the pandemic are still unknown.

“Will it mutate into a new form? Will there be a second wave of outbreaks? Are the many asymptomatic carriers going to infect more people at some stage in the future? We cannot know the answer to any of these questions now – each pandemic is by definition new and possibly different from any to have gone before,” he said. “However, we can anticipate the shape of the Vietnamese economy at some stage in the future when the wave of infections has decreased and has reached a stable situation. The optimistic view is that things will return more or less to normal, albeit that there will be a persistent demand deficit that will depress potential growth in Vietnam and elsewhere. In this view, market fundamentals will not have changed and trade will simply resume.”

Standard Chartered Bank has expected Vietnam’s economy to grow 3.3 per cent in 2020 due to increased external headwinds.

 

“Vietnam is now more integrated with the global economy via its booming manufacturing sector. Its trade-to-GDP ratio has risen to 300 per cent, among the highest in Asia, signifying its high dependence on global demand,” said Chidu Narayanan, economist for Asia of Standard Chartered Bank. “Lower global demand amid likely recessions in the US, the Euro area, and other G10 economies will weigh on 2020 growth. We see growth rebounding to 6.5 per cent in 2021 given an expected demand recovery and the low base from 2020.”

The Asian Development Bank (ADB) forecast that Vietnam’s economic growth will slow sharply in 2020, to 4.8 per cent, but if the outbreak is contained within the first half of 2020, the rate will rebound to 6.8 per cent next year and remain strong over the medium and long term.

The International Monetary Fund has also forecast Vietnam will achieve the fastest growth of 2.7 per cent this year in the ASEAN, before bouncing back to 7 per cent in 2021.

The World Bank is also seeing a positive outlook in Vietnam. It stated that over the medium term, growth is projected to rebound back to 7.5 per cent in 2021 and converge at around 6.5 per cent in 2022, “reflecting an improved external demand and a firming of the services sector, as well as a gradual recovery in agricultural production. The economy will also rebound from the coronavirus pandemic.”

According to the ADB, one of the key drivers for Vietnam to positively grow next year is that the country’s middle class is one of the fastest-growing in Southeast Asia.

“The disbursement of public investment has improved significantly, growing by nearly 18 per cent in January and February over the same period in 2019,” stated a fresh ADB report on Vietnam. “Disbursement will continue to improve in 2020 as this is a priority measure in response to COVID-19.”

Moreover, the large number of trade agreements in which Vietnam participates promise improved market access essential for an economic rebound. Containment of COVID–19 in China and that market’s likely return to normal will help revive global value chains and facilitate economic recovery in Vietnam, the report stated.

This week the government is expected to organise an unprecedented meeting between Prime Minister Nguyen Xuan Phuc and the business community.

According to the Ministry of Planning and Investment (MPI), the meeting is aimed to discuss the most effective incentives for enterprises to get out of their difficulties caused by COVID-19, and to reboot the economy in response to the battle against the coronavirus.

The meeting is also aimed to assess impacts of the pandemic, and how effectively the government’s policies have been implemented in the business community and how enterprises have benefited from such policies. At the meeting, enterprises will have an opportunities to voice their difficulties and advance good ideas to the prime minister and leaders of related ministries.

The MPI has asked enterprises and business associations to send reports on businesses’ performance hit by the pandemic and their initiatives, which will then be reported to the prime minister before the meeting takes place. VIR

Nguyen Dat

Taking lessons on board for an economic jump-start

Taking lessons on board for an economic jump-start

Vietnam’s economy has been seriously hurt by the continuing coronavirus pandemic. 

Vietnam’s economic prospects in 2020

Vietnam’s economic prospects in 2020

In a recent report on global economic prospects in mid-April 2020, the International Monetary Fund forecasts that the world’s economy will slide by about 3%. 

 
 

Other News

.
Business associations unhappy with weekly tests for vaccinated, recovered workers
Business associations unhappy with weekly tests for vaccinated, recovered workers
BUSINESSicon  07/10/2021 

Several business associations in HCM City have called for scrapping a requirement that workers commuting to the city from elsewhere need to undergo a weekly test for COVID-19 regardless of their vaccination or recovery status.

Govt' to consider zero-interest loans for all airlines
Govt' to consider zero-interest loans for all airlines
BUSINESSicon  07/10/2021 

The Vietnam Aviation Business Association asked the Government to consider a proposal to slash 30 per cent off the airlines' income tax for 2020 and the first half of 2021.

Vietnam’s power development plan to boost LNG sector
Vietnam’s power development plan to boost LNG sector
BUSINESSicon  06/10/2021 

The outlook for Vietnam’s emerging liquefied natural gas (LNG) sector remains promising as the country’s need for the product is large to serve its power development plan, according to Fitch Solutions.

Serious worker shortage looms as factories resume operations after prolonged lockdown
Serious worker shortage looms as factories resume operations after prolonged lockdown
BUSINESSicon  06/10/2021 

Companies in HCM City and other industrial hubs like the neighbouring provinces of Binh Duong and Dong Nai are struggling with a labour shortage after the pandemic.

Vietnamese products at risk of trade violation investigations
Vietnamese products at risk of trade violation investigations
BUSINESSicon  06/10/2021 

The Trade Remedies Authority of Vietnam (TRAV) have warned that Vietnamese products are at risking of falling foul of anti-dumping and trade defence investigations. 

State to divest from six major enterprises, raking in US$600-800 million in Q1/2022
State to divest from six major enterprises, raking in US$600-800 million in Q1/2022
BUSINESSicon  06/10/2021 

The State Capital Investment Corporation (SCIC) is expected to divest capital from six major enterprises in the first quarter of next year, fetching between VND15 trillion and VND20 trillion (US$652-870 million) for the State budget.

VIETNAM BUSINESS NEWS OCTOBER 6
VIETNAM BUSINESS NEWS OCTOBER 6
BUSINESSicon  06/10/2021 

Enterprises survive the COVID-19 storm

Lefaso rejects rumours on Nike’s moving production out of Vietnam
Lefaso rejects rumours on Nike’s moving production out of Vietnam
BUSINESSicon  05/10/2021 

Recent rumours spreading on social media on Nike’s moving production out of Vietnam to China and Indonesia are incorrect, stated Phan Thi Thanh Xuan, Vice Chairwoman and General Secretary of the Vietnam Leather and Footwear Association.

Evergrande’s debt bomb a lesson for Vietnam
Evergrande’s debt bomb a lesson for Vietnam
FEATUREicon  06/10/2021 

Experts believe that the huge debt of $300 billion incurred by Chinese Evergrande will have an indirect impact on Vietnam.

Vietnam fails to collect tax from cross-border e-commerce
Vietnam fails to collect tax from cross-border e-commerce
FEATUREicon  06/10/2021 

As trading activities on e-commerce platforms bring huge profits, collecting tax has become a burning issue for many countries.

Red boards with this phrase appear densely on Hanoi streets
Red boards with this phrase appear densely on Hanoi streets
BUSINESSicon  05/10/2021 

“Shop for rent”, “space for rent”, “house for rent”, … are the phrases that appear most on the streets of Hanoi after two months of social distancing.

Ministry forecasts Vietnam’s GDP growth this year at 3%-3.5%
Ministry forecasts Vietnam’s GDP growth this year at 3%-3.5%
BUSINESSicon  05/10/2021 

The Ministry of Planning and Investment has projected the country’s gross domestic product (GDP) growth in 2021 at 3%-3.5%, down 0.5 percentage points from the rate forecast in September.

Businesses reopen in HCM City, but challenges remain
Businesses reopen in HCM City, but challenges remain
BUSINESSicon  05/10/2021 

After months of social distancing the reopening of the HCM City economy on October 1 has brought cheer to both businesses and the public.

VIETNAM BUSINESS NEWS OCTOBER 5
VIETNAM BUSINESS NEWS OCTOBER 5
BUSINESSicon  05/10/2021 

 Project aims to enhance trade remedy capacity as Vietnam joins new-generation FTAs

Hanoi removes 28 administrative procedures in investment
Hanoi removes 28 administrative procedures in investment
BUSINESSicon  05/10/2021 

Hanoi’s authorities have decided to remove 28 administrative procedures in the field of investment.

VIETNAM BUSINESS NEWS OCTOBER 4
VIETNAM BUSINESS NEWS OCTOBER 4
BUSINESSicon  04/10/2021 

Vietnam develops rural tourism through digital transformation

Construction ministry proposes legal amendment to prevent 'land fever'
Construction ministry proposes legal amendment to prevent 'land fever'
BUSINESSicon  05/10/2021 

Many real estate brokers lack professional knowledge and ethics and do ‘hit and run’ business, causing losses to customers by giving wrong advice or even cornering the market and causing artificial land fever.

Vietnam warned of serious air pollution in motorization period
Vietnam warned of serious air pollution in motorization period
FEATUREicon  05/10/2021 

Vietnam is about to enter the motorization period when the market will boom and the air will become polluted. Policies on restricting the use of old-technology vehicles and encouraging green, clean vehicles are needed.

Focus turns to stamping out hotbeds, greening the economy
Focus turns to stamping out hotbeds, greening the economy
FEATUREicon  05/10/2021 

The acceleration of vaccinations will help restore production and business activities, and expand green production zones and a green workforce for the economy.

Quality workforce – “bottleneck” of support industry firms
Quality workforce – “bottleneck” of support industry firms
BUSINESSicon  04/10/2021 

The shortage of high-quality workforce is a “bottleneck” faced by domestic support industry enterprises, said economists.

 
 
 
Leave your comment on an article

OR QUICK LOGIN