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Impacts of Covid-19 on Vietnam becoming more obvious

Impacts of Covid-19 on Vietnam becoming more obvious

Thursday 23, 07 2020
Enterprises are temporarily suspending their operations, leading to a rising unemployment rate.

In large cities like Ho Chi Minh City, this change will be more noticeable when the local economy largely depends on services, which is the most heavily affected sector. Of the 19,000 newly-closed businesses, the majority are operating in the service sector such as wholesale, retail, and culinary. However, recently, the wave of unemployment has spread to industrial zones, showing that many other economic sectors are also vulnerable.

Deserted markets

Since the beginning of the year, more than 50% of the stalls in Ben Thanh market have closed because of the absence of foreign tourists as Vietnam has not reopened to welcome international visitors. Many shops in Phu My Hung, the busiest street in Ho Chi Minh City, have also closed and returned premises. Services such as accommodation and travel have also been put on hold. The busy streets of fashion and F&B have become quiet when stores are closed with a notice of rental or transfer.

Impacts of Covid-19 on Vietnam becoming more obvious

According to analysts of the market research company Q&Me, for the Vietnamese retail market, restaurants and dining outlets are probably have the fiercest competition as many big and small brands constantly appear. However, in 2020, the number of restaurants has decrease by 16%, partly because of the closure of some brand chains. Yet the company also noted this figure is not entirely accurate because this statistic does not include some newly added brands in 2019 and 2020.

According to the Ministry of Industry and Trade, in the first 6 months of this year, sales of accommodation and catering services decreased by 18.1% over the same period last year. In particular, the figure for Q2 dropped sharply to 26.1% due to the influence of social distancing. For the first half of the year, total retail sales of consumer goods and services decreased by 0.8% over the same period last year.

Enterprises in wholesale and retail industry will be on pins and needles when a recent consumer survey showed that nearly 80% of consumers are financially affected due to lower workload, leading them to be more cautious in spending. Referring to the increasing unemployment rate when more enterprises temporarily stop operating, the negative effects will last longer.

This is supported by the fact that even if the epidemic is well controlled in Vietnam, it is still complicated in other parts of the world, which means it will take a lot of time for trade activities to be back to normal. Maybe the wave of closure of service-providing businesses and individuals will also come to the production and export enterprises. In fact, the reduction of labor of many businesses has also been on the rise.

Blocking the unemployment wave

The Socio-Economic Situation Report by the General Statistics Office showed that the effect of Covid-19 epidemic on the labor market is clearly indicated in the increasing unemployment rate. Statistics show that the national unemployment rate for the first six months of the year was at 2.26%, higher than the 1.99% of 2019. In particular, the unemployment rate of the labor force in urban areas in the second quarter was a 10-year record high, reaching 4.46%.

Meanwhile, many businesses have been struggling to find solutions to save themselves and their employees. Many workers who still have a job also have to accept reduced wages and temporary leave to share difficulties with businesses. 

Covid-19 epidemic on the labor market is clearly indicated in the increasing unemployment rate

However, the lack of orders, the sharp decline in sales and other consequences caused by Covid-19 are still ongoing in many companies, resulting in an increasing number of unemployed people. The garment industry has switched to manufacture other products but still lacked orders while tourism has tried to stimulate demand but it is just a temporary solution, and retail relies entirely on domestic demand in the context of spending cuts.

At a press conference of the General Statistics Office, Ms. Vu Thu Thuy, Director of the Department of Population and Labor Statistics shared that the unemployment rate is currently at the highest level in the last ten years, of which the highest increase was in the group of low-expertise workers. This shows that before economic shocks, workers with low professional or non-professional skills are more severely affected. 

Impact of novel coronavirus on Vietnam’s economy

Source: thesaigontimes

Vietnam Economy

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