The fourth COVID-19 outbreak impacted negatively on Vietnam’s economy. The most affected economies were the Southeast and Mekong Delta, making the GDP in the third quarter of 2021 decrease by 6.17% compared to the same period in 2020. GDP in the first nine months of 2021 increased only 1.42% over the same period last year due to the pandemic.
All major industries had decreased growth in the third quarter. Processing dropped by 3.2%, construction by 11.4%, trade by 19.9%, transportation by 21.1%, fishery by -4.19%.
According to the data of the General Statistics Office, the complicated and prolonged pandemic that hit industrial parks and important economic cities such as Ho Chi Minh City, Hanoi, Binh Duong, and Dong Nai had seriously affected trade and service activities. Negative growth in the first nine months of 2021 of some service industries has reduced the overall growth of the service sector and the entire economy.
Specifically, the wholesale and retail sectors decreased by 3.1% over the same period last year, reducing 0.3 percentage points in the growth rate of the total added value of the whole economy. The transportation and warehousing industry decreased by 7.79%, reducing 0.47 percentage points.
Notably, the accommodation and food service industry continued to decline sharply in September 2021, making a 9-month decrease of up to 23.18%, a drop of 0.57 percentage points.
The negative GDP growth was expected. However, its decrease of 6.17% was out of any experts’ prediction. This rock bottom drop changed the whole perception of the year's growth.
Assessing the economic prospects in the coming time, Mr. Nguyen Xuan Thanh, an economist at the Fulbright School of Public Policy and Management, said that multilateral organizations and international banks have been lowering their growth forecasts of Vietnam's economy in 2021. However, they are still quite optimistic and expect economic activity to recover partially in the fourth quarter of 2021 in the direction of safe adaptation and a new normal, strong economic recovery in 2022.
Forecasting the socio-economic situation in the last months of the year, Mr. Nguyen Trung Hieu, Director of the National Accounts Department, General Statistics Office, said that with a 9-month growth rate of 1.42%, the possibility of achieving the required growth target of 6.0% by the National Assembly and 6.5% by the Government for the whole year is not feasible.
Accordingly, based on the 9-month growth of the year, the General Statistics Office makes two forecasts for growth in 2021. In scenario 1, GDP growth for the whole year will reach 2.5%, and in scenario 2, an increase of 3%.
However, according to Mr. Le Trung Hieu, with scenario 1, the growth rate in the fourth quarter of 2021 should be only 5.3%, this is higher than the first quarter of 2021 with 4.48% but lower than the 6.61% of the second quarter of 2021, so it will be more feasible than scenario 2.
Sharing the same opinion, Dr. Ho Quoc Tuan of Bristol University believes that the economic growth pressure in the fourth quarter of 2021 will be immense since this will be the quarter to boost the growth of the whole economy. However, up to now, the provinces have not had a clear plan on reopening, and first of all, they still focus on manufacturing enterprises, while service businesses remain still.
Previously, when forecasting growth in 2021, economist Vo Tri Thanh said that if the fourth quarter of 2021 returns to the new normal and businesses can develop the economy under a controlled pandemic, economic growth for the whole year will be about 3-4%. However, this is still a low increase if looking at the recovery and success of 2020.
Four factors will affect the last months’ economic growth coming into 2022:
By lifting the restrictions on Ho Chi Minh City - a major business hub, Vietnam is gradually reopening its economy, aiming for a positive growth rate in the fourth quarter and for the growth momentum to recover in 2022.
Compiled by VietnamCredit