Vietnamese economy suffers record third quarter contraction

An employee cleans the floor of a shoe store in Hanoi. Photo: AFP / File

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An employee cleans the floor of a shoe store in Hanoi. Photo: AFP / File

Vietnam’s economy suffered its largest contraction on record in the third quarter, officials said on Wednesday, after a devastating wave of Covid-19 forced a widespread suspension of manufacturing in the export-dependent country.

Gross domestic product fell 6.17% year-on-year during the July-September period, with the General Bureau of Statistics (GSO) saying it was the biggest drop since the Asian nation Southeast began recording quarterly figures, apparently in 1986.

Last year, Vietnam was among the best performing economies in Asia and one of the few in the world to grow after maintaining low virus counts and widely open businesses.

But the latest wave of coronavirus, which started in April in its northern industrial parks and quickly spread south to the business center of Ho Chi Minh City, “has had a serious impact” on the city. economy, the GSO said.

State media VNExpress said it was the first time Vietnam had recorded negative quarterly growth since 2000. A third of the country’s 100 million people had to stay at home for months this summer, with factories. closed and seriously disrupted supply chains.

There have been over 770,000 infections and nearly 19,000 deaths.

“The fourth cycle of the pandemic (…) has directly affected many companies, breaking the supply chain,” Deputy Minister of Investments Nguyen Thi Bich Ngoc said on the government’s official website.

“Business and production plans were overturned with a partial or total suspension of operations.

But she added: “The contemporary difficulties and turmoil are temporary.

“The country is starting to ease widespread lockdown orders in a bid to alleviate the problem, but rail and air links across the country remain largely suspended.

“Less than 10% of the population has been fully vaccinated.

Despite the latest figures, the World Bank forecasts Vietnam’s economy to grow 4.8% in 2021, while Vietnam has said it is aiming for a 6.5% expansion.

Elliot Frost

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