News
The impact of the Corona Virus on the Vietnamese economy as of the 20/02/2020
9 April, 2020
This short update is to inform our readers about the influence of the Corona virus epidemy (COVID-19) on the Vietnamese economy as of the 20th of February 2020.
Vietnam has issued Decision No. 173 QĐ-TTg officially declaring the Corona virus Covid-19 as an epidemic – in line with the World Health Organisation's declaration of the virus as a global health emergency. Vietnam has currently declared 16 cases of the Covid-19 infections, 14 of which have recovered and have been discharged from hospitals.
Khánh Hòa province with Nha Trang City as its main tourist destination is preparing measures to declare itself virus-free after no new cases were recorded throughout the past 30 days. The three Covid-19 cases declared in Nha Trang did not have any significant impact on the flow of Russian tourists that still continue to visit Nha Trang massively; the decrease of the Russian tourists flow is minimal compared to the same period in 2019. However, as Vietnam has stopped issuing visas for Chinese tourists on the 30th of January as a temporary measure it is anticipated that the tourism industry in Nha Trang will suffer as China tourists account for approximately 70% of international visitors in the city and in the whole province in general.
It is estimated that tourism could see a loss of up to 5 billion USD through the second quarter, as China is the most important source of foreign tourists in Vietnam, amounting to about a third of its total number of foreign tourist in 2019.
The first batch of exports to China in 2020 containing dragon fruit and wood underwent customs clearance at the Thanh Thuy international border gate between China and Vietnam on February 18-19. Nonetheless several border gates between Vietnam and China in the northern province of Lang Son shall remain closed until the end of February. Government officials also stated that cross-border trade between Vietnam and China is not encouraged for the time being. An obvious result of those measures is that there are hundreds of containers that are still being held up at numerous border gates between both countries.
All flights to and from mainland China (including transit) remain suspended by Vietnam’s civil aviation authority.
Passenger train services between Vietnam and China are suspended until further notice, however freight train services between the two countries continue to operate.
The Ministry of Finance (MoF) has announced a list of medical supplies including masks, dry hand sanitizers, filters, epidemic prevent suits, among others as tax exempted goods until the epidemic ends.
The Ministry of Labour, Invalids and Social Affairs has requested businesses to keep names and personal information of Chinese and foreign workers who have visited virus affected areas. If it is revealed that they have visited virus affected areas, they will have to be quarantined for two weeks for health checks.
More than 300 businesses in Vietnam have temporarily suspended operations, and others have reduced their operations due to the epidemic.
Samsung’s factory in Bac Ninh province resumed its operations, however the company stated that it shall remain vigilant in order to avoid cases among its employees.
The authorities of almost all provinces and cities have decided to further postpone the reopening of schools and universities until the 29th of February.
The Ministry of Planning and Investment estimates that if the Covid-19 epidemic is contained by the end of the first quarter, the total Vietnamese exports to China will fall by 25%. But if the epidemic prolongs to the second quarter, exports to China could fall by as much as 56%.
It is estimated that the Vietnamese GDP will drop down by 0.53 percent from 6.8% down to 6.27% in the first quarter of 2020. And if the epidemic is not contained until the beginning of the second quarter, the GDP it is predicted that it will gradually lower down to 6.09 percent.
It is estimated that the epidemic will provoke increases of the prices of medical drugs and electricity, as Vietnam imports Chinese coal to generate electricity in its power stations.
It is estimated that trade with China could decrease from 13 percent to 16 percent through the second quarter, and agriculture exports to China could fall down to 800 million USD if the epidemic is not contained within the next three months.
Other News
