Novel coronavirus to slow Q1 growth: report

By Minh Son February 4, 2020 | 04:43 pm PT

A welder working at a cement plant in northern Hai Duong Province, Vietnam. Photo by Shutterstock/thi.

The novel coronavirus epidemic will slow Vietnam’s Q1 GDP growth to 6.5 percent from last year’s 6.79 percent, a new report says.

Vietnam’s service sector, which accounted for 41.6 percent of the GDP last year, is likely to be most affected by the novel coronavirus outbreak, especially in high growth sectors such as retail, transportation, warehousing, accommodation, tourism and entertainment, says the latest report by Bao Viet Securities (BVS).

Last week, the Ministry of Public Security ordered a stop to entry visas for tourists from coronavirus affected areas. With Chinese tourists accounting for over 30 percent of arrivals in Vietnam last year, this development could heavily damage the domestic tourism industry in Q1, it said.

Domestic travel is also likely to fall in the period, with the nCoV outbreak coinciding with Vietnam’s peak spring travel season, when many Tet (Lunar New Year) festivities take place. Even if the epidemic is brought under control, the peak travel season would be over and the number of domestic travelers is unlikely to pick up.

The outbreak is also likely to hamper exports, affecting Vietnam’s agricultural, forestry and fishery sectors, of which China is the biggest consumer. Last year, the sector’s export turnover to China reached $5.92 billion, or 35 percent of total agricultural exports.

"If the epidemic affects Vietnam-China trade, growth of the agricultural sector, which is already at a low level, will likely decline further, and in turn put a drag on consumption demand of workers in this sector," the report said.

For the industry and construction sector, disruptions in the global supply chain due to the outbreak may affect the import of some commodities used as input materials for goods manufactured in Vietnam, including those it exports.

Last year, Vietnam’s total import-export turnover with China accounted for 30 percent of the country’s total trade, in which exports to China accounted for 24 percent, and imports 38.7 percent, BVS said, citing data from Vietnam Customs.

The BVS report said that there is a possibility that the epidemic could drag on and continue to negatively affect growth until the end of the second quarter.

The death toll from the epidemic has so far reached 492. It has spread to 26 countries and territories. Vietnam has recorded 10 confirmed cases of nCoV infections, two of whom have been discharged.