Vietnam economy gradually reboots in May

By Dat Nguyen June 3, 2020 | 07:44 pm PT

An employee makes face masks at a factory in southern Long An Province. Photo by VnExpress/Quynh Tran.

The economy is slowly recovering from the impacts of Covid-19 and social distancing in April as rising consumption and manufacturing figures in May indicate.

Sales of products and services rose 27 percent to VND385 trillion ($16.6 billion), with revenues from lodging and food almost doubling.

The number of air passengers quadrupled to 563,700 as domestic routes reopened, and the number of people using roads and trains tripled.

The number of newly registered companies rose 36 percent to 10,700, while the number of suspended businesses fell by 19 percent.

Manufacturing is showing signs of recovery. The Manufacturing Purchasing Managers’ Index (PMI) reached 42.7 points in May, up 10 points from a record low of 32.7 in April. A PMI reading above 50 represents expansion in manufacturing.

Andrew Harker, economics director at British market research firm IHS Markit, said: "The success Vietnam has had in bringing the Covid-19 outbreak in the country under control means the economy can begin along the road to recovery."

However, the PMI data for May suggests the road would be a long one, with the manufacturing sector remaining in contraction mode midway through the second quarter, he said.

The return to growth would likely be gradual, with little support coming from export markets in the near-term at least as the pandemic continues to affect large parts of the world, he added.

But while most economic numbers improved in May, they were down year-on-year for the first five months.

Vietnam recorded a trade surplus of $1.9 billion in the first five months, while trade turnover was down 2.8 percent year-on-year to $197 billion.

"Covid-19 in Vietnam’s major trade markets has negatively affected exports and imports," the GSO said.

Five-month exports fell 1.7 percent year-on-year to $99.4 billion, while imports fell 3.7 percent to $97.5 billion.

The consumer price index has risen by 4.39 percent this year, the highest for the period in the last three years, due to a 14 percent rise in pork prices.

Prime Minister Nguyen Xuan Phuc on Tuesday called for pushing domestic consumption to quickly revive the economy.

The government has revised the GDP growth target to 4.5-5.4 percent for this year, down from 7 percent growth last year.