BUSINESSES UPBEAT ABOUT GROWTH OUTLOOK IN Q4

Although the economy is suffering from "unprecedented shocks" caused by the COVID-19 pandemic, businesses are still optimistic about the growth outlook in the fourth quarter of this year, a business survey showed.

Record GDP decline, unprecedented bankruptcies

According to the General Statistics Office (GSO), Vietnam's third-quarter economic growth plunged 6.17%, narrowing the growth to 1.42% in the first nine months of 2021. This was the deepest drop in history.

Besides, the prolonged COVID-19 pandemic has also sent many businesses to the wall. GSO’s data showed that as many as 45,100 companies halted operations in the first nine months of 2021, up 16.7% year on year. 32,400 companies shut down business operations and waited for dissolution procedures, up 17.4%. 12,800 companies went bankrupt, up 5.9%. As a result, 90,300 companies left the market from January to September. On average, 10,000 enterprises retreated from the market per month, or more than 300 enterprises per day.

Notably, according to GSO, these figures did not fully portray the real number of businesses withdrawing from the market because many localities applied social distancing and businesses there could not carry out bankruptcy procedures.

Moreover, many are currently facing serious shortages of workers. The cost for pandemic prevention also increased a lot and input prices soared.

The setback was also reflected by the formation of new companies. Specifically, in the first nine months of the year, 85,500 enterprises were established, down 13.6% year on year. The average registered capital of a newly established company was VND14 billion, down 3.1%.

According to economic experts, businesses are confronting a lot of difficulties and their stamina is almost exhausted. In the coming time, when the pandemic is contained, they are not likely to recover immediately. Many localities will be unlikely to fulfill economic development targets in 2021. As a result, the country will be unlikely to achieve economic development goals.

Businesses are still optimistic

Assessing business prospects in the fourth quarter, 43.4% of companies believed that business performance will be better than in the third quarter and 26.3% anticipated more difficulties. Notably, the foreign-invested sector was the most optimistic, with 79.4% forecasting a better business outlook in the fourth quarter than the third quarter. These rates in private and State-owned sectors were 71.8% and 68.8%, respectively.

About 43.5% of respondents forecast an output increase; 23.9% anticipated an output decrease and 32.6% predicted stable performance.

About 39.2% of companies hoped for more orders in the fourth quarter; 24.3% anticipated fewer orders and 36.5% predicted stable orders.

In addition, 34.6% of enterprises expected an increase in new export orders; 22.4% foresaw a decline in export orders and 43% hoped for a little change.

Remarking on fourth-quarter growth prospects, Ms. Nguyen Thi Huong, GSO General Director, expected higher growth, even higher than the first quarter and equivalent to the second quarter. This is entirely reasonable when vaccinations are increased rapidly, especially in large urban areas and economic centers; the pandemic is gradually being controlled; inflation is as low as below 4%; and major economic balances are basically maintained. Besides, public and business support policies are being applied more effectively than before.

However, in the coming time, Vietnam needs to accelerate economic reopening, especially major economic centers such as Hanoi and Ho Chi Minh City and key economic provinces such as Binh Duong, Dong Nai and other southern provinces, she said. When the economy is reopened, solutions to foster growth will come from three pillars: Public investment, export growth and consumption.

Talking to Vietnam Business Forum, Dr. Vo Tri Thanh pointed out that economic recovery prospects in the fourth quarter and even next year depend a lot on the ability to control the pandemic. This will positively support three key economic growth drivers: public investment, import-export and private consumption.

To do this, it is necessary to speed up vaccinations and have flexible and appropriate response plans, he noted. Furthermore, in severely hurt localities where social distancing is prolonged and people and businesses have almost run out of resources, it is necessary to take measures to restore resilience.

Last but not least, it is important to closely monitor market recovery momentum around the world, thereby developing strategies for domestic enterprises to follow suit. In addition, it is necessary to work out recovery support solutions given that monetary and fiscal policy space is tight.

Source: VCCI