"The impact of [the Delta] variant as it spread across the country and in particular the economic heartland of Vietnam in the south meant a swift re-introduction of lockdowns and travel restrictions," said CEO of HSBC Vietnam Tim Evans in a recent note.

He forecast GDP growth would be in the range of 5-5.5 percent, depending on the speed and effectiveness of the vaccination rollout, re-opening of the economy and recovery and resumption of major export markets.

But growth could only reach 3.5-4 percent if the vaccination programme is not fast enough and lockdown and social distancing continue to be lengthened, he said.

This will cause more adverse impacts on the economy amid increased pressure on supply chains, he added.

Vietnam in recent months has seen unprecedented disruption to its supply chain, which has caused declining industrial production while key global brands struggled to keep manufacturing going.

In August, mobility in the country fell 60 percent on average from pre-pandemic levels, which resulted in a 40 percent year-on-year drop in retail sales, HSBC data shows.

But there are positive signals that indicate an imminent recovery. Ho Chi Minh City, the Covid-19 epicenter, has given the first Covid-19 vaccination dose to nearly 90 percent of its population and is set to have the majority of residents fully vaccinated by the end of this month.

The State Bank of Vietnam (SBV) has increased credit growth for some commercial banks from 10-12 percent to 14-15 percent this year, which would allow banks to lend more.

Vietnam remains a highly attractive investment destination in the medium term, given the recent reports of investment from Samsung and LG Display, Evans said.

"Strong foreign currency reserves coupled with a stable currency, inflation being under-control, continued strong FDI inflows with an emphasis on the manufacturing sector all position Vietnam will for the future."

HSBC forecasts next year’s GDP growth at 6.8 percent. It was 2.9 percent last year.

Several other organizations including the World Bank and Asian Development Bank have lowered their growth forecast for Vietnam because of Covid-19.