Economic growth from COVID-19 depends on vaccine rollout

Citizens get vaccinated in a clinic in the southern province of Bình Phước. Economic growth after the COVID-19 pandemic will largely depend on the vaccine rollout. — VNA/VNS Photo

Economic growth after the COVID-19 pandemic will largely depend on the vaccine rollout, according to experts.

They said that economic growth would also depend on the effectiveness and side effects of disease prevention measures and financial support packages. They said bad debts continued to be accumulated and could sharply increase to exceed the tolerance threshold of businesses. This is a potential financial risk in the post-pandemic economy.

Nguyễn Đức Thành, Director of the Việt Nam Centre for Economic and Strategic Studies (VESS), said because of the slow pace of vaccination, Việt Nam missed the beat of the world economy’s recovery in 2021. This might lead to the loss of relative advantage. Việt Nam’s vaccine rollout was relatively slow compared to other countries.

The pandemic outbreaks in 2021 slowed the country’s economy growth and caused supply chain disruptions and labour market disturbances. Domestic businesses had been severely hurt. In addition, geopolitical shifts and developments of the world economy might increase risks for businesses in terms of the price of raw material.

Thành said economic growth in the first nine months this year did not really reflect all the difficulties of the economy. The resistance of enterprises had declined, particularly businesses in the southern cities and provinces which were suffering great losses due to the fourth wave of COVID-19.

Phạm Thế Anh, Head of the Macroeconomics Department under the National Economics University, said the market demand had worsened due to the impact of the COVID-19 pandemic and goods circulation had also been severely affected.

Anh told participants that sooner or later, production costs would be reflected in the output prices such as expenses on gasoline, logistics, and costs of disease prevention. When social activities return to normal, consumer demand increases, the above factors would affect prices and put pressure on inflation. It was forecast that by the end of this year, the price of foodstuffs might rise due to difficulties in supply.

Thành forecast that the high growth scenario could be gained this year if all businesses reach adaption in terms of production and limit disruptions in goods supply as of the fourth quarter of 2021. With such a prediction, the country’s gross domestic product (GDP) could reach less than two per cent.

According to the expert the low growth scenario is that cities and provinces have not conducted synchronised measures in the fight against the pandemic. This will cause difficulties in goods circulation. This may lead to the disruption of contracts and production plans and a labour shortage. As a result, the country’s GDP can fluctuate at 0.2 per cent.

In order to ensure the country’s economic growth in the high growth scenario, the Government should speed up vaccination campaigns in cities and provinces and ensure smooth circulation of goods as well as work out fiscal packages for businesses and assist unemployed workers.

Provincial authorities are also required to offer jobs for those who had fled HCM City and nearby provinces of Bình Dương, Đồng Nai and Bình Phước several months ago due to the fourth COVID-19 wave that emerged in the country in late April. — VNS