Virus epidemic to cost Vietnam’s economy billions

Police guard a quarantined village in northern Vietnam

With a substantial drop in tourism arrivals, closed factories, un- or underemployed workers, cancelled flights and empty train stations, Vietnam is suffering dearly from the outbreak of the coronavirus epidemic in economic terms.

In the tourism sector alone, the virus crisis is expected to cause $3 to $4 billion in direct damage in just three months as the loss of Chinese visitors, which normally count for roughly a third of international arrivals, is weighing heavily on Vietnam.

Vietnam is also losing potential visitors from other countries which have become concerned about traveling to Southeast Asia, according to Vietnam’s department of tourism. Some domestic travel within Vietnam has also been restricted.

Apart from that, the supply chains of many factories have been affected as they struggle to secure raw materials they need from neighbouring China. Around 20 per cent of labourers are currently underemployed due to virus-caused declines in demand and Chinese inputs, according to economists.

Workers quarantined, on leave or on strike

Tens of thousands of Chinese migrant workers were quarantined on their return to Vietnam following the Lunar New Year holiday, including about 10,000 in the town of Son Loi close to the China border. At a shoe factory in Thanh Hoa province, nearly 12,000 workers were told to take leave as the company had no raw material for them to work with, local media reported. Also, thousands of workers at garment factories across Vietnam went on strike over fears their Chinese workmates had brought the coronavirus back with them after the holiday.

Adding to that, state-owned Vietnam Railways was reported as saying its revenue in the first 19 days of February fell by about $2.8 million from the equivalent period of last year, partly as a result of having to pay refunds on almost 40,000 unused tickets.

While the Vietnamese government has not lowered its economic growth target for 2020, Vietnam’s Prime Minister Nguyen Xuan Phuc said at the start of February that economic growth in the first three months of 2020 was likely be one percentage point below the government’s target of 6.8 per cent for the period.

This is in roughly in line analysts who say the GDP full-year growth rate forecast of Vietnam’s economy in 2020 should be reduced to around six per cent to 5.9 per cent.

Police guard a quarantined village in northern Vietnam With a substantial drop in tourism arrivals, closed factories, un- or underemployed workers, cancelled flights and empty train stations, Vietnam is suffering dearly from the outbreak of the coronavirus epidemic in economic terms. In the tourism sector alone, the virus crisis is expected to cause $3 to $4 billion in direct damage in just three months as the loss of Chinese visitors, which normally count for roughly a third of international arrivals, is weighing heavily on Vietnam. Vietnam is also losing potential visitors from other countries which have become concerned about traveling...

Police guard a quarantined village in northern Vietnam

With a substantial drop in tourism arrivals, closed factories, un- or underemployed workers, cancelled flights and empty train stations, Vietnam is suffering dearly from the outbreak of the coronavirus epidemic in economic terms.

In the tourism sector alone, the virus crisis is expected to cause $3 to $4 billion in direct damage in just three months as the loss of Chinese visitors, which normally count for roughly a third of international arrivals, is weighing heavily on Vietnam.

Vietnam is also losing potential visitors from other countries which have become concerned about traveling to Southeast Asia, according to Vietnam’s department of tourism. Some domestic travel within Vietnam has also been restricted.

Apart from that, the supply chains of many factories have been affected as they struggle to secure raw materials they need from neighbouring China. Around 20 per cent of labourers are currently underemployed due to virus-caused declines in demand and Chinese inputs, according to economists.

Workers quarantined, on leave or on strike

Tens of thousands of Chinese migrant workers were quarantined on their return to Vietnam following the Lunar New Year holiday, including about 10,000 in the town of Son Loi close to the China border. At a shoe factory in Thanh Hoa province, nearly 12,000 workers were told to take leave as the company had no raw material for them to work with, local media reported. Also, thousands of workers at garment factories across Vietnam went on strike over fears their Chinese workmates had brought the coronavirus back with them after the holiday.

Adding to that, state-owned Vietnam Railways was reported as saying its revenue in the first 19 days of February fell by about $2.8 million from the equivalent period of last year, partly as a result of having to pay refunds on almost 40,000 unused tickets.

While the Vietnamese government has not lowered its economic growth target for 2020, Vietnam’s Prime Minister Nguyen Xuan Phuc said at the start of February that economic growth in the first three months of 2020 was likely be one percentage point below the government’s target of 6.8 per cent for the period.

This is in roughly in line analysts who say the GDP full-year growth rate forecast of Vietnam’s economy in 2020 should be reduced to around six per cent to 5.9 per cent.

1 COMMENT

  1. The trade war waged by the Trump administration has prompted a partial decoupling of the United States and China, the two largest economies on earth. Multinational companies that have used factories in China to make their wares have sought to avoid American tariffs by shifting production to other countries — especially Vietnam. The coronavirus might accelerate that trend, at least for a time, should global companies find themselves locked out of China. The outbreak of the virus in Wuhan, a city that is home to 11 million people, prompted the Chinese government to effectively quarantine the metropolis and much of surrounding Hubei province, barring people from moving around.

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