GDP growth in Q1 hits 10-year low

Upon announcing the Q1 statistics on March 27, the office stated that the services sector enjoyed growth of 3.27%, contributing 41.4% to the country’s overall growth, whilst the agro-forestry and fishery sector also saw growth of 0.08%, contributing 0.2% to the total figure.

These underwhelming figures indicate that the global outbreak of the COVID-19 has exerted an enormous impact on the national economy as a whole.

Goods are in abundant supply at supermarkets during the coronavirus-hit period

By achieving a slowed growth rate of 7.12% in Q1, the industry and construction sector bore the brunt of the pandemic, while the processing and manufacturing industries hit their lowest growth rates during the 2016 to 2020 period.

Moreover, business operations have not been exempt from the slow growth with as many as 18,600 enterprises being forced to temporarily suspend operations during Q1, a year-on-year rise of 26%. Despite this, many firms hope that the impact of the COVDI-19 will lessen before being stamped out in the second quarter, ultimately serving to help speed up production and market consumption.

The ongoing pandemic has also badly affected services and trade activities with consumers becoming more conservative as opposed to frequently going shopping, travelling, and eating as they had done previously.

Furthermore, the number of foreign arrivals in the country suffered an 18% drop during the reviewed period, with the highest declines seen in visitor numbers from China, the United States, and the Republic of Korea.

The impact of the COVID-19, alongside a sharp decline in global oil prices and an abundant supply of poultry, saw the consumer price index (CPI) in March fall by 0.72% in comparison to the previous month. This is the lowest figure of the 2016 to 2020 period, although the CPI during the first quarter was the highest over four years.

In an outlined worst-case scenario that was recently submitted to the government, the Ministry of Planning and Investment forecast that GDP growth for the year would stand at 5.96%, its lowest rate over the past seven years. The ministry also said Vietnam may be one of the four-hardest hit countries and territories in terms of impact of the COVID-19, along with Singapore, Thailand, and Hong Kong.