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|Vietnamese economy continues to reboot during first months of 2021|
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In its latest Vietnam Macro Monitoring report, the WB said, looking ahead, special attention should be paid to how the COVID-19 vaccinations will be rolled out domestically and globally as they will impact the pace of Vietnam’s economic growth. Further fiscal and monetary policy interventions may be needed to support the recovery of private demand.
According to the WB, the Vietnamese government quickly introduced strict but targeted measures to suppress this new outbreak of COVID-19 in Hai Duong, the epicenter, including during the Tet holidays.
As a result, the number of new cases started decreasing, and restrictions were partly eased in the second half of the month.
In the meantime, Vietnam has approved three types of vaccines. The government also approved a resolution to purchase a total of about 150 million doses of COVID-19 vaccines, and prioritized recipient groups.
Vietnam maintains a positive outlook for economic recovery in 2021. Photo: VNA
The WB noted that industrial production slowed as factories closed in observance of the Tet holidays. The industrial production index dropped by 7.2% year-on-year in February 2021. This decline is mainly reflecting the cross-year difference in the timing of the Tet holidays when factories shut down for a week. The two-month moving average still registered an increase of 8.8% year-on-year in the first two months of 2021. Metals production and electronics, computers, and optical products continued to grow by 8.6% and 3.2%, respectively in February, thanks to strong external demand.
Despite the new COVID-19 outbreak, retail sales in February grew by 0.3% month-on-month and by 8.3% year-on-year due to higher consumption demand associated with the Tet holidays. While lower than pre-COVID-19 performance, this growth suggests that the government’s targeted response to the outbreak mitigated the spillover of the negative impacts of anti-COVID stringency measures on economic activities to provinces outside the epicenter.
Vietnam’s merchandise exports fell by 4.2% year-on-year while imports grew by 11.8% year-on-year in February 2021, resulting in the first month of trade deficit since April 2020.
Preliminary data show that exports to the US and China rose while those to the EU, ASEAN, the Republic of Korea, and Japan decreased. The increase in imports was driven by a doubling of imports from China in February 2021 compared to the same period last year, mirroring January 2021 import patterns. In January 2021, imports of phones, computers, electronics, and their parts, and machinery accounted for half of the total imports from China and grew by over 75% year-on-year. This reflects both Vietnam’s heavy reliance on imported inputs in manufacturing, Nhan Dan Newspaper reported.
In the first two months of 2021, the Vietnamese government collected VND286.7 trillion of revenues, which is 0.6% higher than the same period last year. This good performance – the first time that government total revenue is increasing since the beginning of the COVID-19 crisis a year ago reflects the ongoing recovery and the elimination of most tax incentives that were adopted in April 2020.
The Ministry of Finance proposal for the second round of tax and land rental deferrals is being discussed by the cabinet. The total size of the package was estimated at VND115 trillion (US$5 billion). If approved and implemented well, it is expected to help businesses and households maintain their economic activities, particularly in tourism, which remains depressed.
Vietnamese economy continues to reboot during first months of 2021: GSO
The Vietnamese economy continued its recovery during the opening two months of the year, with signs of robust growth in certain sectors coupled with the COVID-19 pandemic gradually being brought under control, according to the General Statistics Office (GSO).
Some development indicators can be seen in areas such as agricultural production, forestry, industry, and business development indexes. Elsewhere, private investment attractions, as well as import-export activities, have also bounced back, the VOV reported.
Most notably, seafood output during February recorded an estimated increase of 0.5 percent to over 570,000 tonnes compared to the same period from last year, while industrial production also witnessed a year-on-year increase of 7.4 percent.
February witnessed over 8,000 new enterprises established nationwide, with registered capital reaching over VND179.000 billion, while the disbursement of FDI capital during the reviewed period rose by 2 percent to US$2.5 billion from the same period last year.
A container ship docks at Cat Lai Port in Ho Chi Minh City. Photo by Shutterstock/xuanhuongho.
Tran Toan Thang, head of the National Centre for Socio-Economic Information and Forecast (NCIF) under the Ministry of Planning and Investment said the national economy is on track to recover, with positive economic signs being recorded during the third quarter and fourth quarter of last year.
These signals serve to provide fresh impetus to growth in January, especially in the fields of import-export, investment, agriculture, and production, he noted.
Despite these positives, over 33,000 local firms have been temporarily suspended in the initial two months of the year, representing an increase of 18.6 percent against the same period last year.
Economists believe there should be drastic measures implemented in an effort to stimulate growth for potential businesses and sectors. This should be carried out with the aim of enhancing local businesses' competitiveness and creating momentum for high economic growth ahead during the remainder of the year.
Nguyen Kim Hung, acting director of the Vietnam Institute of Business Administration and Digital Economy, said that the effective implementation of the COVID-19 vaccination campaign is expected to make positive contributions to the country’s economic recovery moving forward.
Hung expressed his optimism that the local economy will record a strong recovery in March and April, with positive expectations for the containment of the COVID-19 pandemic, GDP growth reaching 6 percent, and the effective rollout of the COVID-19 vaccine.
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