Dr. Can Van Luc and the author of the BIDV Training and Research Institute think that there will be 9 economic sectors that are strongly impacted with the "big" damage level and 6 industries that are affected by the "moderate" level.
Dr. Can Van Luc and the author of the BIDV Training and Research Institute have just released a report on the impact of Covid-19 on Vietnam's economic sectors.
The report said that starting from Wuhan - China from the beginning of December 2019, until the end of April 11, 2020, the Covid-19 pandemic had spread to 210 countries / territories, with nearly 1, 8 million infections, more than 108 thousand deaths. Up to now, the disease has not been controlled and spread quickly, complicated in Europe, the US and many Asian countries; negative impacts on all global and Vietnamese socio-economic activities; in which, most industries and economic sectors were negatively affected. The question is, in the context of limited resources, it is necessary to design and implement support packages quickly and effectively, so how to correctly identify and hit the objects that need support.
In this report, the authors focus on three main areas: (i) updated and updated assessment of the impact of the Covid-19 pandemic on the world and Vietnam economies; (ii) Assess the impact of the pandemic on Vietnam's economic sectors and sectors; and (iii) Suggest some solutions.
Summary of the impact of the Covid-19 pandemic on the world and Vietnam economies
For the world economy, in early April 2020, many international organizations have analyzed, updated and assessed the impact of the Covid-19 pandemic and formulated scenarios of world economic growth in 2020. According to the base scenario of Citi Research (published on April 7, 2020), the world economy will decline, growing by -2.3% in 2020 (compared to 2.6% in 2019, recession more than -1.7% in 2009, of which China's GDP growth is only about 2.4% (compared to 6.1% in 2019), of the US -2.6% (compared to a 2.3% increase in 2019), Japan's -1.9% (compared to a 0.7% increase in 2019) while the Eurozone even grew -8.4% (compared to growth of 1.2% in 2019).
For inflation, in the context of aggregate demand, oil and energy prices plummeted, so although many countries have stimulated the economy, the prices of food and health services have risen, global inflation remains relatively low, around 2.2% (compared to 2.5% in 2019). This growth scenario will be updated and changed; The extent to which the situation depends on three factors: (i) the ability of each country to control diseases, (ii) the effectiveness of support policies / packages, and (iii) the effectiveness of international cooperation. health (in pandemic prevention).
For Vietnam, it can be seen that Vietnam is the country most strongly and directly affected, both on the demand side and on the supply side. Accordingly, the BIDV Research and Education Institute has updated the Vietnam economic growth scenario in 2020 in the context of the Covid-19 pandemic (released on 10 April 2020), in which 3 growth scenario.
With the baseline scenario, the expert team of the BIDV Training and Research Institute said that the Government's measures in the prevention of epidemics as well as the policies to support the economy, businesses and people continue to develop. effectively, epidemics in Vietnam were controlled in the second quarter of 2020 and economic and social activities soon returned to "normal" from June or early July 2020. According to this scenario, Vietnam's GDP growth in 2020 will decrease by 1.8 to 2 percentage points, equivalent to the growth rate of 4.81-5.01% (of which, the first quarter will achieve 3.82% growth; Q2 is expected to increase by 3.45-3.67%; for the first 6 months, it is forecast to increase by 3.81-4.05%).
With a positive scenario, countries around the world achieved positive results in disease prevention and control, measures of blockade and isolation not prolonged (epidemic peaks in the US and Europe fell in late April to in the first half of May, after which the United States and Europe could control the epidemic in June 2020 and the Covid-19 pandemic was basically under control in the middle of the third quarter of 2020; production and business activities soon recovered from the end of the third quarter. In Vietnam, it is assumed that the outbreak of Covid-19 will be controlled in April 2020 or mid-May 2020; Production - business activities were started shortly thereafter. Under this scenario, Vietnam's GDP growth in 2020 will decrease by 1.4 percentage points and reach 5.4-5.6%.
With a negative scenario, outbreaks and pandemics were not controlled until the end of the third quarter, despite the efforts of governments of other countries. In Vietnam, the disease was controlled in the second quarter, but was negatively affected by the total supply and demand from outside. Under this scenario, Vietnam's GDP growth will decrease by 2.58 percentage points to 4.07-4.42% by 2020.
Assessing the impact of the Covid-19 pandemic on Vietnam's economic sectors
Methodology: To assess the impact of the Covid-19 pandemic on economic sectors, the Research team selected 15 economic sectors directly affected by the Covid-19 epidemic and are also important economic sectors. Vietnam's GDP (accounting for about 78% of GDP in 2019).
The Research team based on three basic criteria that actually happened in the first quarter of 2020: (i) import-export turnover or output / turnover taking into account both input and output factors (weighted) accounting for 50% over the same period in 2019; (ii) stock prices of these industries listed on Vietnam's stock market compared to the beginning of the year (reflecting investors' assessments and comments, high market characteristics, weighting accounted for 50%); and (iii) refer to data on the number of enterprises suspended from business in the first quarter of 2020. With the result of the calculation, if the decrease of less than 5% is considered a minor impact, a reduction of 5-10% is considered a moderate impact and a decrease of over 10% is a major impact.
Regarding the selection of specific branches and domains for evaluation:
Regarding agriculture and auxiliary sectors: the research team selects agro-fishery production and processing industries, focusing on evaluating a number of commodities affected by trade activities (degree of increase or decrease of import-export turnover, reflecting difficulties in both inputs and outputs). In addition, the group also assessed a number of sectors as inputs for agricultural production (such as agrochemicals - including fertilizers, pesticides) that are indirectly affected when agriculture is affected. enjoy.
For industry and construction: the Research team selects the industries that are influenced by the inputs (due to the shortage of raw materials, especially from China, Korea, Japan, USA and EU) or outputs ( due to declining domestic and international consumer demand, especially from the aforementioned 5 markets) or affected by strong fluctuations in commodity prices in the market. In particular, the research team selected 6 main sectors: textile, footwear; paper production; manufacture of wood products; steel production and trading; mining and construction. Particularly for telephone, electronics, electronics and components: the localization rate is very low (about 5-10%), the proportion of domestic contribution in exports is also very low (about 8%) and the situation Production and export in the first quarter of 2020 still increased well, so it was not included in the evaluation model (the impact level of Covid-19 epidemic was relatively small).
For service sector: the research team selects fields that are affected by fluctuations in aggregate demand and disturbance of activities due to diseases and epidemic prevention measures of Vietnam as well as other countries. Accordingly, the research team selected 7 main industries: tourism; transportation, warehousing; retail; finance - banking - insurance; real estate business; health services; and education and training.
Detailed impact assessment
Agriculture-forestry-fishery: difficulty in exporting goods and importing agricultural auxiliary
Many agricultural products, mainly agricultural and aquatic products, encountered difficulties in the first quarter of 2020 because of the Covid-19 pandemic, first in the Chinese market, then in South Korea, Japan and from early March is the US, EU and ASEAN markets.
Agricultural and aquatic products of Vietnam exported to various markets but directly and clearly affected are fresh vegetables, fruits and aquatic products because these are fresh or semi-processed products, which are difficult to obtain. long-term storage. During the peak period of the epidemic, exports to these major markets were very slow, sharply reduced, mainly due to blockades, restrictions on travel - trade, leading to the cancellation of a series of cases. co-export; on the other hand, there is a lack of manpower and lengthy procedures because of compliance with disease control regulations. Therefore, the export turnover of agricultural and forestry products decreased by 4.5%, aquatic products decreased by 11.2% in the first quarter of 2020 compared to the same period; in which many items dropped sharply like rubber (-26.1%), vegetables (-11.5%), coffee (-6.4%) ... etc. Accordingly, the price of fishery stocks fell by nearly 2% in the first quarter of 2020 compared to the beginning of the year (according to HSE).
The supporting industry is indirectly affected, as shown by the output of the chemical, fertilizer and agricultural equipment industry decreased (-5%) over the same period, and the stock price of chemical industry plummeted (- 13.8%) compared to the beginning of the year.
On the other hand, businesses in the agricultural sector are often not strong, sustainable businesses. Therefore, when difficulties occur such as epidemics (together with the effects of drought and saltwater intrusion in the Mekong Delta), 274 enterprises have to suspend operation for a definite time in the first quarter of 2020, an increase of 18.6 % compared to the same period in 2019.
Industry and construction: Manufacturing industries with disrupted supply chains, broken lines and construction declined due to real estate difficulties.
First of all, the Covid-19 pandemic has clearly affected many areas of industrial production in three aspects. Firstly, Vietnam is integrating deeply and deeply into many manufacturing industries following the supply chain model such as phones, electronics, computers, textiles, footwear, manufacturing and processing agricultural products, cars - motorbikes. , iron - steel, petrochemical refining ... (also the main export industries, creating many jobs of Vietnam), are being negatively affected by the interrupted, broken, and lacking global supply chain. input source. Currently, many manufacturing sectors of Vietnam rely heavily on imported raw materials and fuels, mainly China, South Korea and Japan (accounting for 56% of intermediate goods supply to Vietnam in 2019. ).
Secondly, many FDI enterprises in Vietnam and accompanying them are Vietnamese enterprises acting as agents of level 1 and level 2 ... in the above mentioned industries, which are also affected, encountering two major difficulties: (i) lack of resources Supply input from China, Korea and Japan .... and (ii) lack of labor force due to blockade, quarantine or travel restrictions for workers and experts from partner countries.
Third, many of Vietnam's manufacturing sectors focus on export processing. The Covid-19 epidemic has caused many difficulties in foreign trade activities, reducing the demand for output, so the partners have extended, delayed, canceled orders, caused a decrease in export turnover and Quantity. Specifically, in March 2020, many US and EU enterprises announced to suspend receipt of textile and wooden orders from Vietnam for 3-4 weeks. South Korean businesses, although there is no official statement, have also actively suspended orders from Vietnamese businesses.
For processing and manufacturing industry, the production index of the whole industry only increased by 7.1% in the first quarter of 2020, much lower than the increase of 9.2% in the first quarter of 2019; The number of enterprises temporarily ceased operations increased by 28.3% compared to the same period in 2019. In which, the industries that were negatively affected were quite strong: (i) textiles, footwear with export and import turnover decreasing by over 10%. over the same period, the price of textile stocks decreased by 18.2% and footwear decreased by 6% compared to the beginning of the year; (ii) steel production and trading with a revenue of about 10% and a stock price decrease of 27.4%; (iii) mining (especially oil and gas and coal) - mainly due to a sharp drop in oil prices, with crude oil exports down 8% and stock prices down 32%. Other industries, such as papermaking and construction, suffered from "moderate" impacts (Table 1).
Service sector: strongly affected by declining aggregate demand (both at home and abroad)
The most direct and direct influence is the tourism industry (including tourism, accommodation, catering and travel services). Revenue from international tourists contributed about 6.1% of GDP in 2019, of which the main markets are China, South Korea and Japan contributing 61.4% of total international visitors to Vietnam. In the context of widespread disease, many countries have implemented measures to blockade, restrict travel and strengthen quarantine, resulting in a sharp decline in tourism demand. Similarly, the epidemic also reduced the demand for domestic tourism when the Government implemented restricting crowds, canceling many festivals and conferences, and recently isolating the whole society. In the first quarter of 2020, the number of international visitors to Vietnam decreased by 18% compared to the same period last year; while the number of domestic visitors decreased by 6%, the whole industry revenue decreased by 11% compared to the same period in 2019.
Accordingly, the share price of the travel group decreased sharply (-33.2%) compared to the beginning of the year. Meanwhile, revenue from catering and accommodation services decreased by 9.6% and 27.8% over the same period last year. The number of businesses suspending operations in accommodation and catering services in the first quarter of 202020 increased by 29.3% over the same period in 2019.
Along with that is the transport industry, warehousing very strong impact. According to the Ministry of Transport, the initial damage of stopping the routes of Vietnamese airlines was about VND 30,000 billion (equivalent to 60% decrease compared to the same period), revenue of railway and road industries decreased by over 20 billion. %. According to GSO, the number of passengers carried by the industry in the first quarter of 2020 decreased by 6.1% compared to the same period last year (in the second quarter of 2020 is forecasted to decrease even more due to the blockade, isolation and restriction orders). travel, especially in Europe, the US and ASEAN). Similar to the tourism sector, the share price of transport and warehousing groups decreased sharply (-32.8%) compared to the beginning of the year; and the number of transport - warehousing enterprises temporarily stopped operating in the first quarter of 2020 increased by 29.3% over the same period in 2019.
Retail is also the sector directly affected, mainly by declining aggregate demand. However, the positive point is that instead of shopping at shopping centers, supermarkets, consumers tend to increase the use of e-commerce due to the advantage of not having to go to crowded places and goods. Fast and convenient shipping. The consumption structure has also changed in the direction of increasing the proportion of purchases of essential goods (food, food), pharmaceuticals (drugs, health care products), and home entertainment services ( digital television, online games ...). Overall, retail sales increased slightly by 4.7% (up 1.6% if excluding the price factor, much lower than the 9.3% increase in the first quarter of 2019). Therefore, the shares of the retail sector fell sharply (-41%) compared to the beginning of the year and the number of wholesale and retail businesses temporarily stopped operating, increasing by 21% in the first quarter of 2020 compared to the same period in 2019.
The banking-finance-insurance sector saw a modest drop in revenue in the first quarter of 2020 (-2%) compared to the same period, as this is the field that was more indirectly affected and had a lag (customers In case of difficulties, the company started to reduce the use of services, absorbing bad capital and bad debts are likely to increase sharply) and was assessed by investors as having high risks, causing stock prices to plummet (over 20%). ) compared to the beginning of the year.
Specifically, for the banking sector, the general difficulty of the economy directly affected customers' credit demand (by the end of the first quarter of 2020, the credit increased by 1.3%, much lower than the increase. 3.2% in the same period of 2019, according to the State Bank of Vietnam, reduces revenue, as well as increases the risk of bad debt due to customer difficulties and offers more preferential loans to rescue customers. In addition, the extension, postponement and reduction of interest and fees will also reduce the revenue and profit of banks; causing bank stock prices to plummet (-22.4%) compared to the beginning of the year.
In the stock market, the negative effects of the disease have clearly reflected. By the end of March 31, 2020, VN-Index dropped strongly (-31%) comparing to the beginning of the year, foreign investors saw a net selling in 33 sessions in a row with a net selling value of Q1 9,200. billions dong; Stock prices of securities companies fell by 28% compared to the beginning of the year. The insurance sector is also affected by double effects: (i) the demand for insurance services (including life and non-life) is reduced due to buyers' economic and income difficulties; and (ii) the ratio of insurance payments (especially health insurance increases) makes the industry's revenue decrease. Shares of insurance enterprises plummeted (-35.2%) compared to the beginning of the year.
For real estate business, the most affected is the leasing of commercial premises, offices for rent, hotels and apartments. The epidemic caused people to restrict direct shopping at shopping centers (down by 70-80% in February and March - according to CBRE; many shop owners have returned the premises, or negotiated to rental lessors and many landlord units have also proactively reduced their prices by 20-40%, but with office space, the epidemic has delayed investment in this area and rental growth will Due to the increase in the number of people working remotely, the reduction of office use rates, so landlords with short-term leases will be the most vulnerable, according to CBRE, with the Covid-19 translation scenario. under control in quarter 2/2020, the vacancy rate of office segment in HCMC increased by 7-14%.
Meanwhile, the hotel is almost empty, the number of tourists has decreased, leading to a decrease in the occupancy of high-class hotels by 40-60% in 1Q2020 compared to the same period last year. Apartment segment faced difficulties when the demand for accommodation, investment and foreign tourists decreased, the transaction volume in the quarter decreased by 80% compared to the same period last year, the absorption rate was only 14.3 % (according to Real Estate Brokers Association); also in Ho Chi Minh City, the consumption rate of apartments in quarter 1/2020 decreased by 37% compared to the same period last year. In this context, although the value of the industry products increased slightly (2.65%), much lower than the 4.75% increase in the first quarter of 2019; but the stock price of this industry dropped sharply (-26.3%) in Q1 / 2020 compared to the beginning of the year. In particular, the number of temporarily suspended real estate businesses increased (94.1%) in the first quarter of 2020 compared to the same period in 2019.
The health service sector was impacted in two directions, but more negatively. The positive point is that investment and budget spending in this field has been increasing (+ 1.5% compared to the same period in 2019), the potential for long-term development is bright. However, businesses that provide these services (especially private hospitals) have experienced a significant drop in revenue due to a significant drop in the demand for other diseases (not Covid-19), while increasing spending on medical equipment. spreading measures to prevent disease risks ... etc. As a result, shares of medical service businesses decreased by 12.7% compared to the beginning of the year and the number of temporarily suspended businesses increased by 24.2% in the first quarter of 2020 compared to the same period in 2019.
Another service area heavily affected by this pandemic is education and training. In the context of complicated disease epidemics, provinces and cities decided to close schools at all levels and continuously renew when the disease has not shown signs of ending. Many schools, especially private and public sector, have suffered a sharp decline in revenue while still paying a lot of ground costs, salaries for teachers, staff, etc. In addition, the entire training program of the industry has been disturbed, causing additional costs to build and redesign the program. According to that, training and employment codes dropped sharply (-30.5%) comparing to the beginning of the year and the number of education and training enterprises stopped operating in Q1 / 2020 increased by 24.5%. over the same period.
With the methodology, analysis and judgment as above; It can be seen that up to 9 economic sectors were strongly impacted with the "large" level of damage and 6 sectors were impacted at a "moderate" level.
Five suggestions from evaluation results:
According to the authors, it is necessary to affirm that the number one priority task of Vietnam continues to be effective epidemic prevention, contributing to maintaining macroeconomic stability and social order.
In parallel with disease control, it is necessary to speed up the implementation of support packages that the Government is focusing on directing: (i) Monetary - credit policy package (restructuring, debt rescheduling and viewing) consider reducing interest on the total outstanding loans of about VND 2 million; new loan packages with a total committed limit of VND 300,000 billion with preferential interest rates from 1-2.5% / year ); (ii) Fiscal package (extension, deferment of taxes and land rent, reduction of a number of taxes and fees with a total value of approximately VND 180,000 billion); and (iii) a social security package with a total value of about VND 62,000 billion for more than 20 million workers and disadvantaged people.
However, the implementation of the current support packages can be slow, confusing and difficult to ensure openness, transparency, consistency, quickness and effectiveness without specific guidance on criteria for support beneficiaries (requires specific groups). The research team recommends that it should base on at least 15 above-mentioned industries and sectors and the small, medium and micro enterprises (most of countries support this object, Vietnam's fiscal support package) Men do not include the group of medium-sized enterprises), and individual business households (with business registration and tax payment).
The industries and economic fields that need support should be reviewed, evaluated, supplemented and adjusted in time, at least quarterly in 2020, to ensure winning, right and not leaving behind objects. really need support.
It is necessary to update the socio-economic development scenario in 2020 in the context of the Covid-19 pandemic and the management results of the first quarter of 2020; especially scenarios, solutions to promote production and business, socio-economic activities right after the end of the basic epidemic in Vietnam.
(Dr. Can Van Luc and author of BIDV Training and Research Institute)
Kommentare