Vietnam's worst economic quarter in decades

The ongoing COVID-19 outbreak, combined with severe lockdown restrictions, has led to Vietnam's worst economic quarter in decades.

Nikkei Asia reports that the country's gross domestic product (GDP) contracted by 6.17% from July through September. This was the first time Vietnam experienced negative economic growth in a quarter since 2000, when the General Statistics Office of Vietnam started reporting quarterly GDP growth rates. 

In the third quarter of 2021, extensive lockdown measures and rigid movement restrictions largely shut down major economic hubs like Saigon, Binh Duong and Dong Nai. In the second quarter, which ended as the outbreak was accelerating across southern provinces, Vietnam reported GDP growth of 6.57%. In comparison, the economy expanded by 2.69% in Q3 of 2020.

The most recent financial quarter was also far worse than April-June 2020, when growth of 0.39% — due to a national lockdown and COVID-19's impact on major trade markets — set the previous mark for worst quarterly GDP growth since 2000.

The news source adds that the central government had set a target of 6.5% GDP expansion for 2021, but the figure is now just 1.42% through the first nine months of the year.

In late August, the World Bank cut their annual growth projection for Vietnam from 6.8% to 4.8%, and it remains to be seen whether the historically bad Q3 data will require another forecast cut.

In 2020, the country saw overall GDP growth of 2.91%, making Vietnam one of the few nations to manage positive economic expansion that year, though this figure was the lowest in over 30 years.