A vegetable vendor is seen at Ben Thanh Market in Ho Chi Minh City,
Oct. 6, 2021. Photo by VnExpress/Quynh Tran

World Bank revised its growth forecast for Vietnam down to 2–2.5 percent this year, as third quarter figures reveal the impact of the fourth Covid-19 wave on the economy.

This is a drop from the bank’s August forecast of 4.8 percent as GDP in the third quarter contracted 6.17 percent.

Services fell by 9.3 percent year-on-year in the third quarter due to social distancing, while industry dropped 5 percent as factories across southern manufacturing hubs were shuttered to contain the outbreak.

Retail sales in September expanded by 6.5 percent from August, but was still 28.4 percent lower than a year ago as many restrictions were still in place, particularly in Hanoi and Ho Chi Minh City.

Labor market conditions deteriorated with labor force participation dropping 2.6 percentage points in the third quarter from the second.

But some positive figures revealed growth prospects. Foreign direct investment inflow reached $22.1 billion in the first nine months, a 4.4 percent increase year-on-year.

"The merchandise trade balance improved as import growth slowed while FDI commitment grew for a third month, suggesting foreign investors remain confident in the longer-term potential of the economy."

The government should prioritize helping ease logistics constraints, continued testing and vaccination.

The Ministry of Planning and Investment had recently pegged Vietnam’s growth at 3–3.5 percent this year and 6–6.5 percent next year.