The rapid suppression of the new COVID-19 outbreak in late January 2021 has helped maintain Vietnam’s positive outlook for economic recovery this year, the World Bank (WB) has said.
Illustrative image (Photo: VNA)
Hanoi (VNA) - The rapid suppression of the new COVID-19 outbreak
in late January 2021 has helped maintain Vietnam’s positive outlook for economic
recovery this year, the World Bank (WB) has said.
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 recovery of
According 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.
The WB noted that industrial production slowed as factories closed in
observance of the Tet holidays. Industrial production index dropped by 7.2
percent 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 percent year-on-year in the first two months of 2021. Metals production, and
electronics, computers and optical products continued to grow by 8.6 percent
and 3.2 percent, respectively in February, thanks to strong external demand.
Despite the new COVID-19 outbreak, retail sales in February grew by 0.3
percent month-on-month and by 8.3 percent 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 percent year-on-year while imports grew
by 11.8 percent 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
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 total imports from China and grew by over 75 percent year-on-year. This reflects both Vietnam’s heavy reliance on imported inputs in
In the first two month of 2021, the Vietnamese government collected 286.7
trillion VND of revenues, which is 0.6 percent 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 a second round of tax and land rental
deferrals is being discussed by the cabinet. The total size of the package was
estimated at 115 trillion VND (5 billion USD). If approved and implemented
well, it is expected to help businesses and households maintain their economic
activities, particularly in tourism, which remains depressed./.