Illustrative image (Photo: VNA) Hanoi (VNA) - The rapid suppression of the new COVID-19 outbreakin late January 2021 has helped maintain Vietnam’s positive outlook for economicrecovery this year, the World Bank (WB) has said.
In its latest Vietnam Macro Monitoring report, the WB said, looking ahead, specialattention should be paid to how the COVID-19 vaccinations will be rolled out domesticallyand globally as they will impact the pace of Vietnam’s economic growth. Furtherfiscal and monetary policy interventions may be needed to support recovery ofprivate demand.
According the WB, the Vietnamese government quickly introduced strict buttargeted measures to suppress this new outbreak of COVID-19 in Hai Duong, theepicenter, including during the Tet holidays.
As a result, the number of new cases started decreasing, and restrictionswere partly eased in the second half of the month.
In the meantime, Vietnam has approved three types of vaccines. Thegovernment also approved a resolution to purchase a total of about 150 milliondoses of COVID-19 vaccines, and prioritized recipient groups.
The WB noted that industrial production slowed as factories closed inobservance of the Tet holidays. Industrial production index dropped by 7.2percent year-on-year in February 2021. This decline is mainly reflecting thecross-year difference in the timing of the Tet holidays, when factories shutdown for a week. The two-month moving average still registered an increase of8.8 percent year-on-year in the first two months of 2021. Metals production, andelectronics, computers and optical products continued to grow by 8.6 percentand 3.2 percent, respectively in February, thanks to strong external demand.
Despite the new COVID-19 outbreak, retail sales in February grew by 0.3percent month-on-month and by 8.3 percent year-on-year due to higher consumption demandassociated with the Tet holidays. While lower than pre-COVID-19 performance,this growth suggests that the government’s targeted response to the outbreakmitigated the spillover of the negative impacts of anti-COVID stringencymeasures on economic activities to provinces outside the epicenter.
Vietnam’s merchandise exports fell by 4.2 percent year-on-year while imports grewby 11.8 percent year-on-year in February 2021, resulting in the first month of tradedeficit since April 2020.
Preliminary data show that exports to the US and China rose while those toEU, ASEAN, the Republic of Korea, and Japan decreased. The increase in importswas driven by a doubling of imports from China in February 2021 compared to thesame period last year, mirroring January 2021 import patterns. In January 2021,imports of phones, computers, electronics and their parts, and machineryaccounted 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 inmanufacturing.
In the first two month of 2021, the Vietnamese government collected 286.7trillion VND of revenues, which is 0.6 percent higher than the same period lastyear. This good performance – the first time that government total revenue isincreasing since the beginning of the COVID-19 crisis a year ago reflects theongoing recovery and the elimination of most tax incentives that were adoptedin April 2020.
The Ministry of Finance proposal for a second round of tax and land rentaldeferrals is being discussed by the cabinet. The total size of the package wasestimated at 115 trillion VND (5 billion USD). If approved and implementedwell, it is expected to help businesses and households maintain their economicactivities, particularly in tourism, which remains depressed./.
VNA
