How will the coronavirus affect Vietnam’s economy?
Bao Viet Securities (BVSC) predicted that the GDP would grow by 6.5 percent in Q1 2010, or 0.2-0.4 percent lower than the same period last year. The growth will recover in Q2.
The service sector is believed to suffer most heavily from the nCoV epidemic, especially transport, accommodation, tourism, retail, restaurant and entertainment activities.
Chinese travelers accounted for 30 percent of total number of foreign travelers to Vietnam in 2019. Therefore, the suspension of visa granting to Chinese travelers will cause damages to the tourism industry.
In 2019, the service sector made up 41.6 percent of Vietnam’s GDP. Therefore, the slowdown in the tourism sector’s growth will certainly affect Vietnam’s GDP growth.
Other business fields in the service sectors, including wholesale and retail, which had 8.82 percent growth rate in 2019, and transport and warehousing, 9.12 percent, will also be the fields to bear big impact from the epidemic.
|The business fields that are directly influenced by the nCoV outbreak, including wholesale and retail, automobile repair, motorbikes and engine vehicles, transport and warehousing, accommodation and eatery, arts and entertainment services, made up 17.3 percent of GDP in 2019.|
The business fields that are directly influenced by the nCoV outbreak, including wholesale and retail, automobile repair, motorbikes and engine vehicles, transport and warehousing, accommodation and eatery, arts and entertainment services, made up 17.3 percent of GDP in 2019.
In addition, agriculture production, forestry and seafood will also suffer as exports to China are on the decline.
China is the major market for Vietnam’s farm produce which consumed 35 percent of Vietnam’s total farm produce exports, worth $5.92 billion.
Therefore, if trade with China is affected, the growth rate of the agriculture – forestry – seafood sector, which always is low, would see further decreases.
Deputy Minister of Industry and Trade Tran Quoc Khanh said at a meeting held days ago that the impact of the epidemic and anti-epidemic measures on import-export activities is ‘relatively large’, and that ‘border trade is most affected’.
The current total turnover from import/export activities across land border gates is $7 billion and Vietnam’s export turnover through official channels is $3.7 billion.
However, BVSC noted that the farm produce exports have decreased partially because of the anti-epidemic measures taken by Vietnam. Therefore, once state management agencies find reasonable measures to maintain import/export activities in a safe way, the import/export will return to normal.
As for the construction and industry sector, the disruptions in the global supply chain stemming from the epidemic in China could affect the import of items like input materials for manufacturing in Vietnam.
Vietnam’s total import/export turnover with China in 2019 accounted for 30 percent of total export turnover.
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