European business confidence dips amid 4th Covid wave

The index declined to 45.8, ending five consecutive quarters of gains, a survey by the European Chamber of Commerce in Vietnam (EuroCham) found.

In over a decade of doing the quarterly survey this is only the fourth time the index has dipped below the midpoint level of 50, the first in 2012 during Vietnam’s banking crisis and the other three since last year due to the pandemic.

In the second quarter 45 percent of European business leaders expected the economy to deteriorate in the following three months, compared to just 4 percent in the first quarter.

Overall, there is "caution and concern" among business leaders, as they expect a difficult period ahead, the survey said.

One major concern is the vaccination progress in Vietnam. More than half of business leaders agreed that their employees not being vaccinated within 2021 would have a significantly negative impact on their business.

"The EuroCham Business Climate Index reaffirms the urgent need for Vietnam to speed up vaccinations," EuroCham Chairman Alain Cany said.

Local lockdowns, social distancing, and travel restrictions are not permanent solutions and would cause significant economic harm over the long term, he claimed.

The survey also found that most businesses had either not been approached by authorities for vaccinations or have submitted paperwork for it but do not know how they are prioritized.

Only 17 percent of Eurocham members have donated to Vietnam’s national vaccination fund, with many claiming to have concerns about the transparency of donations.

The business group estimated it would require over half a million doses to vaccinate its members’ employees.

However, European businesses remain hopeful of a recovery just like in the third quarter last year. Almost 80 percent plan to maintain or increase their payroll and investment in the third quarter.