The COVID-19 pandemic is raging around the world and has an unprecedented negative impact

on the world economy and Vietnam. In this regard, we need to take measures to limit the risks of
disease to the economy, ensure reasonable growth and social stability, and lay the foundation for
rapid and sustainable economic growth in the coming years. 
So far, the COVID-19 epidemic is still developing in many countries in the world, which has a
negative impact on major economies such as the United States, China, Japan, the European
Union and so on. In Vietnam, in the first half of 2020, COVID-19 had an impact on the
economy, reducing Vietnam's economic growth to the lowest level in 10 years. It is believed that
the COVID-19 pandemic has passed and the economy will recover from this difficult period.
However, after 99 days of no community cases, SARS-CoV-2 cases were found in Da Nang,
Guangyuan and Guangnan and spread to all provinces. Other cities in the country (Hanoi, Ho
Chi Minh City, Haiyang, Da Clarke...) threaten economic growth, enterprise development and
worker income.  
Impact of COVID-19 pandemic on Vietnam's economy 
After 35 years of reform (1986-2020), Vietnam's economy has made great achievements. The
economic growth has been at a positive level and has been maintained at a high level of around
8% for many years; The poverty rate dropped sharply from 58% in 1993 to 11.3% in 2009 and
less than 4% in 2019; People's income has improved significantly, and people's lives have also
improved. However, during more than 30 years of reform, Vietnam's economy has been affected
by external shocks for many times, such as the Asian financial crisis in 1997, the world financial
crisis in 2008 and the epidemic shock in 2020. Unlike the previous two financial and monetary
shocks, this COVID-19 shock is unprecedented and has a strong impact on many countries in the
world, especially Vietnam. 
Although the COVID-19 pandemic has affected many sectors of China's economy, its
performance is concentrated on the two main factors of supply and demand. As for the demand
factor, according to the Prime Minister's order No. 16/CT TTg of March 31, 2020, "On the
implementation of emergency measures to prevent and prevent COVID-19 epidemic", the
COVID-19, together with the implementation of necessary social isolation measures, led to a
sharp decline in domestic consumption. At the same time, major economies (the United States,
China, the European Union, Japan and South Korea) have also been seriously affected by the
epidemic and have taken social distance measures, resulting in a decline in economic growth and
a decline in import demand, including goods imported from Vietnam. 
According to the data of the National Bureau of Statistics, in the first half of 2020, the total retail
sales of goods and the income of consumer services decreased by 0.8% compared with the same
period in 2019. If the price factor is not included, the decline will be even greater, at 5.3% (up
8.5% in the same period in 2019). Among them, the retail sales of goods in the first six months
of 2020 increased by 3.4% compared with the same period in 2019. Daily necessities, such as
food, supplies, tools and household appliances; However, clothing, transportation, cultural
products, education and other commodities are seriously affected by social distance measures. 
Also in the first half of 2020, the income from accommodation and catering services decreased
by 18.1% compared with the same period in 2019; Tourism revenue fell by 53.2% - the sector
most affected by the COVID-19 epidemic and the implementation of social distance measures. 
In terms of investment demand, in the first half of 2020, the investment capital of the whole
society increased by 3.4% year on year, the lowest growth rate in 2016-2020, with the state-
owned sector increasing by 7.4%; The non-state sector increased by 4.6%, while the foreign
direct investment sector decreased by 3.8%. In the first half of 2019, the investment capital of the
whole society increased by 10.3% year-on-year; Among them, the state-owned sector grew by
3%, the non-state sector by 16.4%, and the foreign direct investment sector by 9.7%. Therefore,
compared with the same period last year, in the first half of 2020, the investment demand of the
non-state sector and the foreign direct investment sector decreased. Foreign direct investment
capital declined the most, from 9.7% in the first half of 2019 to negative 3.8% in the same period
of 2020; Compared with the same period in 2020, the growth rate of investment in the non-state
sector dropped from 16.4% in the first half of 2019 to 7.4% this year. However, the only bright
spot is that the investment capital of the state-owned sector has increased from 3% in the first
half of 2019 to 7.4% in the same period of 2020. During the period of economic difficulties and
the decline of total demand, the state played an important role in limiting the decline of total
demand. 
External demand also declined. In the first half of 2020, the turnover of export commodities
decreased by 1.1% compared with the same period in 2019, of which the turnover of export
commodities increased by 11.7%; Foreign direct investment (including crude oil) fell by 6.7%. It
is noteworthy that in the first half of 2020, the turnover of export commodities increased by 7.3%
year-on-year; The domestic economic sector grew by 10.8%, and the foreign direct investment
sector (including crude oil) grew by 5.9%. Therefore, the export turnover of domestic economic
sectors has increased by more than 10%; The foreign direct investment sector's commodity
exports will decline in 2020 and rise in 2019, resulting in an increase in economic exports in
2019 and a decline in 2020. This fact shows that the export volume of China's economy is
heavily dependent on the foreign direct investment sector, and the COVID-19 pandemic has a
negative impact on investment and global value chains, as well as on the export of China's
economy. 
In general, due to the impact of the COVID-19 pandemic, economic demand (consumption,
investment and export) declined, thus inhibiting production activities and economic growth. The
measures currently being taken by the government are mainly aimed at stimulating total demand
and restoring production. 
In terms of supply factors, the COVID-19 pandemic has destroyed the supply chain of inputs and
labor. For example, in the automotive industry, due to the scarcity of input parts and the
implementation of social distance, Honda, Nissan, Toyota, Ford, Hyundai and other domestic
automobile manufacturers have to announce the suspension of production, Until the end of the
era of social distance, the supply chain was reconnected, and the automobile manufacturing
enterprises were put into operation again. 
Many enterprises, especially those with foreign experts and foreign workers, are seriously
affected by COVID-19 under the condition of insufficient labor supply. The labor cost in this
period is also higher, because enterprises must invest more masks, preservatives and safety
measures to avoid virus infection. 
From a social perspective, the impact of COVID-19 has increased income poverty and near-
poverty rates, and reduced the temporary income of families and workers. According to the
survey results of the United Nations Development Programme and the United Nations Women's
Programme (2020), "in December 2019, the average poverty rate was 11.3%. In April 2020, the
poverty rate rose to 50.7%. The near-poverty rate rose from 3.8% in December 2019 to 6.5% in
April 2020. " More importantly, ethnic minority families, families of informal workers and
migrant families are more affected by the epidemic. According to the survey results of the United
Nations Development Programme and the United Nations Women's Programme (2020),
"compared with December 2019, the average income of ethnic minority households in April and
May 2020 was only 25.0% and 35.7% respectively. At the same time, these figures are higher,
with Kinh and Chinese households estimated at 30.3% and 52% respectively. In April and May
2020, it is estimated that compared with the level in December 2019, the average income of
immigrant families is only 25.1% and 43.2%. The number of non-immigrant families is 30.8%
and 52.5% respectively. 
COVID-19 affects all aspects of social and economic life, and has a negative impact on
economic growth, trade activities, labor force, employment and worker income. However, in the
face of this impact, the country quickly took effective measures to first curb the spread of the
epidemic and then develop the economy. In terms of controlling the epidemic, not spreading in
the community for a long time (more than 3 months), and social and economic development
activities, it has proved that the solution is initially successful, Especially before the outbreak of
the epidemic at the end of July 2020, the tourism industry began to recover. 
Policy solutions for the next stage 
Vietnam is preparing for the 13th National Congress of the Party, summarizing the
implementation of the 10-year socio-economic development strategy for 2011-2020, and
formulating the socio-economic development strategy for 2021-2030 and the vision for 2045. To
build Vietnam into a strong and prosperous country. 
Requirements for economic structure adjustment related to the transformation of growth mode;
Improve the socialist market-oriented economic system; Scientific and technological
development and innovation; Realizing the digital transformation of the economy is more urgent
than ever, because it is a way to achieve rapid and sustainable economic growth, catch up with
leading countries and realize the vision of building a strong and prosperous Vietnam. 
However, the COVID-19 pandemic in the last year of the implementation of the socio-economic
development strategy in 2011-2020 and its impact on the years before 2021-2030 have brought
unexpected new challenges. This was an unexpected impact, which made the economy deviate
from the development track since 2012. Therefore, in order to quickly restore the economy to a
new normal development track, this "unprecedented" epidemic impact needs to be dealt with in a
timely manner, rather than problems during the long-term backlog, Slow down the growth rate
and change the economic structure. In order to achieve the long-term goal, the government needs
to take measures to help the economy develop in the future, stabilize the society and lay the
foundation for rapid and sustainable growth 
In view of the impact of the COVID-19 pandemic on the economy, the government quickly
introduced monetary, fiscal and social security policies to help enterprises and people through
the most difficult period of the COVID-19 impact. First of all, the monetary and credit policy
package aims to restructure, expand and delay debt, and consider reducing the interest rate of the
total outstanding debt affected. Second, the total committed limit of the new loan scheme is
about 300 trillion Vietnamese dong, which is 1% - 2.5% per year higher than the traditional
preferential credit rate. Third, the total value of the fiscal package (expansion, postponement of
taxes and land rents, and reduction of some taxes and expenses) is VND 180 trillion. Fourth, we
will provide more than 20 million workers and vulnerable groups with a social security plan of
62 trillion Vietnamese dong... 
The package of assistance to economic entities is being implemented, and its effectiveness
cannot be fully evaluated at present. The economy has not recovered from the first COVID-19
wave in April 2020, when the country achieved the separation of the whole society. By the end
of July 2020, the community virus infection has erupted again, seriously affecting the economy.
The goal of economic development and good epidemic prevention is more difficult and
challenging than ever before. However, with the determination of the government, the
participation of all ministries, departments and local governments, and the joint efforts of the
people of the whole country in combating the spread of SARS-CoV-2 virus, this goal is not
impossible. In order to achieve the dual tasks of anti-epidemic, economic development and social
stability, the following measures should be implemented in the future: 
First of all, rapid positioning and extensive detection to curb the spread of disease. Limit the
activities (tourism, festivals, bars, etc.) that interact with people, especially in the hot spots where
the epidemic outbreak occurs. It is necessary to publicize the measures taken by people to
prevent and prevent the spread of the virus, such as wearing masks, restricting public meetings
and washing hands frequently. 
Second, in accordance with the objectives set by the Prime Minister, accelerate the payment of
public investment, and assign the responsibility for the payment of public investment to the
person in charge; Ministries, departments, branches and local governments need to work closely
to eliminate bottlenecks, pay public investment quickly, stimulate aggregate demand in the short
term and create long-term growth capacity for the economy. 
Third, in the first half of 2020, the foreign direct investment sector - in terms of foreign direct
investment and export turnover - experienced negative growth, which was due to the negative
impact of the COVID-19 pandemic on the world economy, cutting off global and regional supply
chains. However, the investment growth in the domestic economic sector has declined, but the
export growth is still relatively good. For this region, the government needs to provide support
policies (tax exemption, tax reduction, social insurance extension, interest rate reduction, etc.)
for domestic enterprises to cope with external difficulties and negative impacts. 
Fourth, freelancers, business families, immigrants and ethnic minorities are more seriously
affected by the COVID-19 epidemic than other groups, Therefore, the aid package being
implemented by the government needs to eliminate bottlenecks so that support resources can find
the address most affected by the epidemic. 
Fifthly, this unprecedented epidemic impact shows that Vietnam's health and education system
needs to be strengthened and fundamentally changed. The state, enterprises and society should
increase investment in medical and educational facilities to effectively cope with future medical
shocks. More importantly, medical and educational facilities need to be changed to take
advantage of the results of the Fourth Industrial Revolution (such as online learning) to adapt to
any situation. 
Sixth, in an interdependent economy, a slowdown in growth or a break in the external supply
chain will have a negative impact on the economy and domestic manufacturing industry.
However, excessive dependence on the foreign direct investment sector (investment and export)
will bring huge risks to the economy from external shocks. In this case, Vietnam needs to rethink
and recognize its development model in order to establish a better balance and link between the
growth drivers and economic sectors. 
Seventh, deeper integration into the world economy through free trade agreements is an
inevitable trend, but the economy will also face more external shocks. It is necessary to build a
strong economy, but it is more necessary to build an economy with strong adaptability and
flexibility in a complex and unpredictable developing world. This requires a vision and strategy
to develop cohesive and competitive domestic enterprises and become the real pillar of the future
economy. 
Eighth, the COVID-19 pandemic has brought great challenges to China's economy, as well as
opportunities. This impact will help accelerate the digital transformation of the economy; The
great benefits of applying the results of the Fourth Industrial Revolution have made people more
aware of the emergence and extensive development of new products. These trends require
institutional and regulatory reforms to promote the development of the digital economy. 
The above solution is emergency response; This is a long-term foundation to help the economy
overcome difficulties at an early date, return to the track of development, and build a strong and
prosperous Vietnam for the future. 
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