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WB: Vietnam's economy has coped well with the new wave of pandemic

15/06/2021

According to the Vietnam Macroeconomic Update in June, the World Bank highly appreciates the resilience of industrial production before the fourth wave of COVID-19.

Compared to previous waves of the pandemic, this is the time when the number of infections in Vietnam has increased the most. Amid the development of the pandemic, the Government had to apply strict movement restriction measures in the affected provinces and cities, such as Hanoi, Ho Chi Minh City and Da Nang. In Bac Giang and Bac Ninh, a number of important factories and industrial parks were also temporarily closed because of the epidemic.

However, the industrial production index in May is estimated to increase by 1.6% over the previous month and increase by 11.2% over the same period last year. The PMI also shows business conditions have improved, reaching 53.1 in May.

According to statistics, the index of industrial production in Bac Giang decreased by 40.9% compared to April and 33.3% compared to the same period in May, while the electronics manufacturing index fell by 53.6% and 46.9%, respectively.

In addition, the WB also pointed out the impacts that Vietnam's economy has to face amid the new wave of the pandemic.

Implementing social distancing for prevention and control of the pandemic, stores had to close, retail sales fell 3.1% in May after a brief recovery in the previous month. The World Bank believes that there is an uneven impact of COVID-19 among retail sub-sectors because sales of the service sector were more severely affected, decreased by 8.9% month-on-month, compared to that of goods only decreased by 1.7%.

However, the WB also noted that if the pandemic is not controlled in the short term, Vietnam's manufacturing and retail industries will be affected. Exports may also be affected by production contraction in some industrial zones.

Also according to the WB, in the first five months of 2021, the export and import value of goods still reached the highest levels that Vietnam had ever recorded, increasing by 29.1% and 35.4% respectively over the same period in 2020.

This indicates solid growth in exports of computers, electronics and machinery, etc. as well as a strong recovery in exports of phones, textiles and footwear. This broad-based growth was driven by strong demand from the US and China as well as recovering demand from the EU, ASEAN, South Korea and Japan.

With FDI attraction, Vietnam fell for the second month in a row. This lower level of commitment may reflect seasonal factors, but also reflect the caution of foreign investors due to the current outbreak situation. In the first 5 months of the year, the total committed FDI capital reached USD 14 billion, equivalent to the same period in 2020.

In addition, due to the influence of the world commodity price increase, Vietnam's inflation continued to increase. Accordingly, the consumer price index (CPI) increased by 0.3% compared to April. The recent increase in commodity prices reflects the Government's decision to increase fuel prices in late April and mid-May, causing gasoline, diesel and kerosene prices to increase. Due to the shortage of supply, the price of input materials for metal production also increased by 4.8% month-on-month, causing increases in the price of housing and construction materials.

 

Kylie Nguyen

© 2019 Vietnam Bank for Agriculture and Rural Development No. 2 Lang Ha street, Ba Dinh district, Hanoi, Vietnam
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