In spite of Vietnam’s GDP growth during the first quarter of 2020 hitting its lowest figure since 2011 with 3.82%, a number of experts have come to the conclusion that this growth can still be considered strong when taken in comparison with other economies from across the region.
Most notably, not all industries have been forced to stop their operations, whilst the majority are not at risk of collapse. Therefore the country’s entire economy is still enjoying a number of bright spots, with more needing to be identified in order to push forward with plans to record further economic growth in the near future.
According to a report released recently by the General Statistics Office, three economic sectors, namely agriculture, forestry, and fishery, recorded growth of only 0.08% during the reviewed period.
This small level of growth is a result of being the industries most negatively affected by the fallout of African swine fever, bird flu, drought, saline intrusion, and the novel coronavirus (COVID-19) epidemic.
Despite recording small levels of growth, Pham Dinh Thuy, Director of the Department of Industrial Statistics under the Ministry of Planning and Investment, points out that there still remains several bright spots in the national economy.
The most prominent sectors are medicine production, pharmaceutical chemistry, and pharmaceuticals, all of which have seen surges of up to 28.3% in comparison with the same period from last year due to the growing demand for domestic production and the export of drugs.
In addition, other industries such as refined petroleum products, food, electronics, optical computers, along with mobile phones and their components also enjoyed significant growth, contributing considerably to the state budget.
Thuy notes that, “At first we thought that the food, electronics, optical computer manufacturing sectors, especially mobile phones and electronic components would suffer enormously from the impact of a sharp decline in raw materials imported from China, but new generation mobile phone products launched by Samsung sold well.”
“Besides, foreign investment continued to shift to Vietnam with the entire production line of high-quality mobile phones being moved to the northern port city of Hai Phong. In the context of China’s restricted production and the existing trade war between the United States and China, many potential markets around the world have shifted to importing electronic components from Vietnam,” he adds.
In normal times it is typically the service sector which is the part of the economy that accounts for the highest proportion of gross domestic product (GDP), but the negative consequences brought about by the COVID-19 epidemic has caused first quarter growth to only reach 3.27%, approximately half the figure seen during the same period last year.
Hoang Tung, Director of Pizza Home, a business operating in the food service industry, outlines the difficulties that firms are facing in terms of production and other drawbacks caused by a significant reduction in terms of the amount people are spending on eating out. Simultaneously, the price of food material has risen due to the ongoing epidemic.
Despite experiencing a sudden decline, the situation relating to the COIVD-19 has given e-commerce and logistics across the whole service industry the opportunity to record strong growth, particularly in the fast delivery segment.
According to preliminary statistics, e-commerce has enjoyed an increase of 30% on year in terms of revenue thanks to the newly implemented social distancing policy. This is followed by the logistics industry, particularly freight forwarding, which has also seen similar levels of annual revenue growth, contributing greatly to national GDP during the first quarter of the year.
Overall, one of the most eye-catching features of the economic picture of the first quarter of 2020 has been the speed of public investment disbursement.
By the end of January 31, the disbursement of investment capital of ministries, sectors, and localities had only reached 0.95% of the scheme planned for by the state. In contrast, by the end of March this figure had risen to 13.2% of the yearly plan.
Nguyen Viet Phong, Director of the Department of Construction Statistics and Investment Capital, affirms that the speed of disbursement of public investment capital during the first quarter reflects the fact that the government’s solutions are becoming more effective.
“The efficiency of the fast disbursement of public investment is due to the government’s renovated policy management, and the amended Investment Law which has since replaced old shortcomings, thus making investment procedures simpler, and disbursement of public investment better. If public investment expands by 1%, it will contribute 0.06% to growth,” Viet Phong notes.
With a few positive examples beginning to emerge, it is believed that the economic picture has several bright points that can serve as extra leverage for the entire economy to grow in the future. This picture is markedly different to the economic slowdown being endured by regional partners and other nations globally.
Therefore, first quarter GDP growth of 3.82% can be seen as evidence that the efforts of the entire political system, various economic sectors, and human resources can come together to achieve the common goal of overcoming difficulties, and putting the nation on the road to economic recovery in the near future.