After a record slowdown in the second quarter of 2020 when the Vietnamese economy only grew by 0.39 percent year-on-year, growth rebounded to 2.62 percent in the third quarter as the Covid-19 pandemic appeared well under control, according to the World Bank’s Vietnam Macro Monitoring report.
Overall, the economy expanded by 2.1 percent from January to September, which was much lower than the 7 percent growth rate during the same period last year. However, this was still a remarkable performance in the context of the Covid-19 pandemic.
Industry expanded by 3.08 percent between January and September, followed by agriculture with 1.84 percent and services with 1.37%. The biggest drop was seen in services as tourism and transport have been the most severely hit by Covid-19. The number of foreign tourists declined by 70 percent in nine months compared with the same period last year.
Manufacturing and retail sales continued to register lower rates of growth than during the pre-pandemic period, but both expanded faster in September than in August. The industrial production index grew by 4.8 percent year-on-year in September, up from 2.1 percent recorded in August.
The growth of retail sales of goods and services rebounded to 2.2 percent month-on-month in September and grew by 5.3 percent year-on-year. The retail sale of goods has been the main driver of growth in this subsector. Travel and tourism are picking up again domestically.
Unemployment rose significantly in response to the April lockdown. Urban workers were the most affected as they were more exposed to mobility measures and restrictions. While conditions have gradually improved in recent months, the recovery of the labour market is still in progress.
Vietnam’s trade surplus reached $16.8 billion from January to September, bolstered by a $2.8 billion surplus in September.
Trade, by partner, varied significantly in nine months, as exports to the United States and China increased but shipments to the EU fell slightly. Similarly, imports from China grew by 2.7 percent but decreased from all other main partners.
Foreign direct investment (FDI) recovered in September to some $1.65 billion, compared to the August low of $720 million. From January to September, the total FDI commitments were down by some 19 percent compared to the same period in 2019.
The September Consumer Price Index remained flat compared to July and August 2020, reflecting short term stability in the prices of food, energy and transport. It was up 3 percent compared to September 2019, driven mostly by the higher prices of food and catering services.
The total State budget revenue declined by 11.5 percent from January-September compared to the same period in 2019. Concurrently, State investment expenditure increased by 40.1 percent year-on-year. This was partly due to a notable improvement in disbursement, accounting for 57.2 percent as of September.
According to the World Bank, economic recovery appears to be firming up and becoming more broad based, suggesting that the gross domestic growth rate could reach 2.5-3.0 percent in 2020. “Because of uncertainties in both the domestic and international contexts, greater attention should be paid to mitigating the risks facing public finance and the financial sector,” the bank suggested.