Vietnam’s economy slows down due to the 4th wave of pandemic

At the end of Q1/2021, Vietnam’s economy was on the rise with many positive macroeconomic indicators and recovered business results. However, the return of the Covid-19 epidemic, once again, has put domestic businesses into struggles and slowed down the economy. The 4th wave of Covid-19 was considered as the most severe one that Vietnam had to suffer. Domestic production has been forecasted to continue facing many challenges in the coming times.

The manufacturing index remains stable, trending sideways:

Source: VIRAC, GSO

In May, the IIP index has grown by 1.6% over the previous month and 11.6% over the same period. PMI has failed to maintain the uptrend in the previous 3 months. The reason is due to the outbreak of COVID-19 in late April in Vietnam, which has restrained the growth of the manufacturing sector. Growth rate of production output, new orders and employment all slowed down. Companies also had difficulty in filling orders and purchasing raw materials. The sharply rising input costs caused selling prices of goods to increase at the strongest level in more than a decade. In this case, the manufacturing and processing industry has grown prominently with an increase of 14.6% over the same period and 2.6% over the previous month.


Source: VIRAC, GSO

Domestic and foreign demand increases slightly:

Total retail sales of goods were VND 393.6 trillion, declined 4% over the previous month, and increased 2.29% over the same period. Domestic demand has slowed down due to the influence of the latest Covid-19 wave.

Source: VIRAC, GSO

The total import and export turnover of Vietnam in May 2021 reached USD 262.3 billion, up 33.75% over the same period. In which, export accounted for USD 130.95 billion, up 30.8% and import reached USD 131.35 billion, up 26.89%. Import and export activities continued to be the spotlight in the context of the unpredictable pandemic. However, logistics cost was still high due to the lack of global empty containers and poor circulation of goods. On the other hand, the demand for imported raw materials for production activities continues to increase strongly.


Source: VIRAC, GSO

World news in May 2021

World commodity demand grows steadily:


Source: VIRAC, GSO

The price indexes of the three main commodities continued to grow, even surpassing the pre-pandemic period. This resulted from the global economic recovery outlook, which thanks to the economic bailout packages; widely deployed vaccines and the recovery of Chinese demand for goods. The price of energy commodities in 2021 is expected to increase by 30% compared to the average of 2020. Oil output of the OPEC+ is forecasted to grow gradually in the coming time, which helps oil price to reach 56 USD/barrel in 2021 and 60 USD/barrel in 2022.

US economy starts prospering

In Q1/2021, the US had a trade deficit of 847 billion USD; import grew by 5.7% while exports fell by 1.1%. It is shown that the US is the main importing country while the supply in the rest of the world can not meet the demand of this country.

The amazing recovery speed of China’s economy

China’s GDP growth rate has reached 18.3% – the highest quarterly growth rate since 1992. In which, retail sales of goods increased by 33.9%; fixed asset investment increased by 25.6% and industrial production increased by 24.5%. The demand for domestic goods and online retail has increased rapidly. Export activity grew steadily in the context of the global economic situation showing signs of recovery, factories in this country racing to meet foreign orders.

EU officially fell into recession in Q1/2021

GDP in Q1/2021 of the Eurozone has decreased by 0.6%. Meanwhile, GDP in the EU-27 area has also decreased by 0.4% over the same period, which is the sharpest decline since 1995 and the consecutive second-quarter decline in GDP. This is mainly due to the continued increase in the number of Covid-19 infections as well as the slow implementation of vaccination programs compared to other regions.

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