Vietnam posts record GDP slump in Q3 due to COVID-19 curbs

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HANOI (Businesshala) – Vietnam’s GDP contracted 6.17% in the third quarter of 2021 from a year earlier, as pandemic restrictions hit, the sharpest quarterly decline on record, government data released on Wednesday showed.

FILE PHOTO: Shipping containers are seen at a port in Hai Phong, Vietnam on July 12, 2018. Businesshala/Kham/File photo

The services sector contracted 9.28% in the year-ago period, while the industrial and construction sector fell 5.02%, the General Statistics Office (GSO) said in a statement. The agriculture sector expanded by 1.04%.

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“The COVID-19 pandemic has severely affected all aspects of the economy, with strict lockdowns imposed in several major production cities and provinces,” the GSO said in a statement.

GSO traditionally releases data before the end of the reporting period and its data is often subject to revision. The growth rate in the second quarter was reduced from 6.61% to 6.57%.

After successfully containing the virus for much of last year, Vietnam has been battling a surge in infections since April, bringing total cases to 770,000 and 18,936 deaths, mostly in its business hub Ho Chi Minh City and neighboring industrial provinces.

The outbreak has forced authorities to impose strict lockdowns in Vietnam’s largest cities and provinces, and prompted companies to suspend production.

The government last week took steps to gradually ease the lockdown after pressure from trade unions and warnings from investors that restrictions would signal a move away from the country.

The government is targeting 6.5% GDP growth this year, but earlier this month a minister said the growth could be 3.5%-4.0%.

Analysts said the monthly activity data indicated the worst could be over.

“We still expect a massive pick-up in the fourth quarter, with production returning to normal quickly due to higher vaccination rates among manufacturing workers and a wider easing of restrictions,” Oxford Economics said in a note.

However, it said logistics and supply chain disruptions were a risk to the outlook and it would revise its 2021 GDP growth forecast to 5.4%.

The GSO said about 90,000 businesses suspended operations or went bankrupt in the January-September period. Of those, 32,400 were dissolved, up 17.4% from a year ago.

It said the unemployment rate rose to 3.43% in the third quarter, up from 2.40% in the second quarter.

According to the GSO, exports in September fell 0.6% from a year earlier to $27 billion and the Index of Industrial Production fell 5.5%.

Editing by Ed Davis

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