Can Van Luc, chief economist with state-owned lender BIDV, said at an economic forum Monday that severe impacts of the Covid-19 pandemic and ensuing social distancing campaign were main contributors to the Q3 fall in HCMC.

If the prediction comes true, it would be the first time since 2000 that Vietnam records a negative GDP growth in a quarter.

Revenue from services could fall over 10 percent in the third quarter, while some industries like footwear and beverage recorded a negative growth of 28 percent and 23 percent respectively in August.

"A possible negative growth in the third quarter shows that this is the most challenging time for the economy, as social distancing measures in 25 localities, including Hanoi and Ho Chi Minh City have directly impacted manufacturing and services," Luc said.

Other experts at the forum expressed similar concerns about the economy.

Vu Thanh Tu Anh, dean of the Fulbright School of Public Policy and Management, said that GDP growth will be relatively low in the third quarter due to Covid-19 impacts, but did not specify a figure.

Retail sales in July fell about 20 percent year-on-year and in August by 33 percent, showing that the disease has inflicted severe damage on the economy in the third and this could continue in upcoming quarters, he said.

Many people have lost their jobs, temporarily or otherwise as many companies suspend operations or withdraw from the market, he added.

"If we do not partly reopen the economy and resume transport activities, there is a high risk that the supply chain will be disrupted."

However, Tu Anh also said that he anticipates the economy would recover in the last quarter of the year as demand for investment and consumption will bounce back after a long period of restrictions.

The 3.5-4 percent growth target for this year of the Ministry of Planning and Investment is "totally achievable," he said.

The last quarter’s growth would need to reach 5 percent for the whole year’s growth to reach 3.5 percent, he added.

Inflation is likely to reach 2.7 percent as the most, against the target of under 4 percent, as consumption demand is currently low, he said.

Vo Tri Thanh, former deputy head of the Central Institute for Economic Management (CIEM), said that an economic recovery plan needs improvement in institutions, business environment, investment, infrastructure, digital transformation and support for businesses and labor.

Thanh also said that the country should be able to catch up with the recovery speed of surrounding countries and strategic partners in the next two years.

Labor issues need to be prioritized, he stressed, noting that in HCMC alone, it would take about two years for the labor pool to resume pre-pandemic proportions.