Industrial production and retail sales could be further affected by the fourth wave of Covid-19 in Vietnam if it is not contained quickly, the World Bank (WB) has said in its latest update on the Vietnamese economy.
According to the WB, the latest outbreak has led to the sharpest rise in the number of Covid-19 cases since the start of the pandemic, prompting the government to implement tougher mobility measures, including in main urban centers and also in several industrial parks.
The bank stated that industrial production showed strong resilience by expanding by 1.6% in May but retail sales fell by 3.1% as they were affected by social distancing measures and the closure of many shops.
Vietnam’s external position eroded slightly in May with a decline in the export of goods and foreign direct investment commitments, down by 6.7% and 20%, respectively, compared to the previous month.
In other macroeconomic updates, consumer prices rose by 0.3% in May as against April, driven by higher global commodity prices while credit expanded at a slower pace due to weakening economic activities and slightly higher interbank interest rates.
The government’s budget recorded a surplus in the first five months of 2021 as revenue rose by 15.2% while expenditure dropped by 3.7% due to a marked slowdown in the implementation of public investment projects.
The WB stated that if the current outbreak is not contained quickly, it could affect both industrial production and retail sales, as well as exports, due to the slowdown of activity in some industrial parks.
It suggested that the government consider adopting a more accommodative fiscal stance to support those people and businesses affected as well as focus on stimulating domestic demand.