Limited mass vaccination has slowed economic recovery

Saigon Investment
(Saigon Investment) - Economic recovery in Asian countries, which includes Vietnam, is moving far too slow under the current pandemic situation, and much of this is being attributed to limited mass vaccination of the population.

Illustrative photo.

Illustrative photo.

At a Standing Committee meeting of the National Assembly on 15 June, on the current socioeconomic situation in the first months of 2021, Chairman Vuong Dinh Hue said that the Party Committee had accurately predicted concerns for economic recovery for 2021. The concerns covered two important aspects of mass vaccination, and a global property bubble, which are both putting pressure on inflation and causing negative effect on macroeconomic factors. Saigon Investment spoke with Mr. Tran Du Lich, an economic expert, on all the above issues.

JOURNALIST: - Sir, what do you think about this current fourth wave of Covid-19 that has engulfed Vietnam and is having serious socioeconomic impact on the country's development?

Dr. TRAN DU LICH: - I believe that the country has been suffering a lot from worrying socioeconomic conditions caused by the fourth Covid-19 wave since late April this year, especially the huge outbreaks in industrial parks and throughout a big city like Ho Chi Minh City, which is the country's economic hub.

Although the Covid-19 hotspots in the Northern provinces have been brought under control and several areas have not seen any new cases for the last 21 days, the situation is generally still quite complicated, particularly in Ho Chi Minh City. It is hard to predict exactly when it will be possible to once again revive economic activities back to pre-pandemic days.

The services sector will only see a significant recovery if the disease in areas currently subject to social distancing restrictions stipulated in the Prime Minister's Directives 15 and 16 can be contained by July, and the country gains a state of normalcy again. At the moment, the dual task of containing the pandemic and also keeping the economy afloat is hard to achieve.

Sectors such as tourism, transportation and other city activities are still being badly hit by the pandemic, making life very difficult for people providing these services. I do believe that the impact of this current wave is even more catastrophic than the one in 2020, and businesses are facing even bigger and more complicated problems this time.

- Sir, as the National Assembly Chairman, Mr. Vuong Dinh Hue, said that developed countries have sufficient vaccines to cover their population, which enables them to contain the situation. However, vaccine rollout in Asia in general and in Vietnam in particular has been rather slow, causing serious economic slowdown. What is your opinion on this?

- I agree with National Assembly Chairman, Mr. Vuong Dinh Hue's opinion. It is true that most of the developed countries are shifting from social distancing to community immunity based on satisfactory vaccination programs. We have been very successful in Vietnam in our fight against the pandemic in the first stage, but if we take action as directed by the Prime Minister, which means that we change position from being a defender to one of an attacker, we can move faster. That is to say that we need to speed up vaccination drives across the country in order to fight the disease. This switch in strategy will bring in a state of normalcy much faster, seeing the current scenario.

The Vietnamese economy is open, paving the way for a wide array of economic activities, which includes attracting Foreign Direct Investment (FDI), exports and tourism as key drivers for reviving the economy. Therefore, if we are slow in creating community immunity, then we fall behind and our international trade activities will be severely hindered if we do not issue the so called vaccine passports, as other countries in the world are doing.

The Government efforts in seeking vaccines and conducting mass vaccination programs could help our country catch up with most of the regions in the world. How speedy our economic recovery will be, and how sustainable our economic development will be, will depend entirely on how effective and efficient our community immunity drive will be.

- Sir, the risk of a global property bubble has appeared as a result of ultra-easy monetary policies in the United States and other countries. Consequently, real estate prices in the world in the first five months of the year increased by 20% to 35%, crude oil prices have soared, and so have the prices of other commodities such as raw materials, farm produce and stocks around the world, including in Vietnam. How do you think we can address all these problems?

- It is true that the global economic situation seems to be flowing in the opposite direction than what we generally expected. For more than a year, ever since the Covid-19 pandemic occurred, there have been different predictions about what the post-pandemic period would be like. Currently, this unpredictability still continues. Anything can happen, and anything can change very suddenly in any field, from geo-economics, geopolitical, international trade activities, globalization to production chains, transportation chains, product supply chains, services and technology.

Thus, any economic development plans for industrialization in the traditional sense in countries like Vietnam will have to be completely redirected towards changes in the future. The challenges of any post-pandemic scenario could be based on how we design our economic policy that is capable of adapting to various uncertain changes in the international and regional arena. This is an important step in achieving the dual goal to contain the pandemic as well as to achieve a state of new normalcy.

However, the indicators on the Vietnamese economy so far, such as the Index on Industrial Production (IIP), exports, Consumer Price Index (CPI), basic inflation; and credit growth, have not shown unexpected fluctuations. Risk of excessive growth of real properties and stocks seems to have calmed down. I suppose we should keep track of all international emerging situations, though it is high time we also adjust our current monetary policies.

With regards to the current economic situation, it is essential to cope with two serious and ongoing problems. It is now vital to introduce immediate measures to help companies stay afloat, survive and recover, and simultaneously ensure social benefits for unemployed people, especially in urban areas. In this sense, the financial policy should include unemployment benefits. These measures should play a pivotal role in the social security policy, which is to provide affected individuals and organizations with sufficient assistance at this time, which would also include sizable reduction or exemption of taxes and duties until the end of 2021.

- Thank you very much.

Yên Lam (interviewer)

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