Summary:
- Vietnam government implemented nationwide lockdown on April 1 to April 22
- Converters reduced the buying quantities due to slow demand for end products
- Some workers take turns for paid leaves
- Vietnam’s GDP growth expected to slump to 4.8%
- Polymers demand in Q2 and Q3 2020 will be affected by the Coronavirus pandemic
In January 2020, the World Health Organization (WHO) confirmed a new novel Coronavirus as the cause of a respiratory illness in Wuhan, China. On January 23, Vietnam announced the first Coronavirus case after a man traveled from Wuhan to Hanoi. The local media reported that the country tightened the medical control at the border gates as well as airports. Other than that, SSESSMENTS.COM also received information that the Vietnamese government also implemented strict monitoring on suspected infections. As such, the number of confirmed cases is relatively low compared to other Southeast Asian countries. According to the data from the Vietnam Ministry Of Health, there are 268 people confirmed positive for Coronavirus as of April 23, with the highest number of infections in Hanoi and Ho Chi Minh.
Being the exemplary country in handling the Coronavirus issues, the pandemic also took its toll on the economy in Vietnam. To curb the spreading of Coronavirus, the government decided to implement strict social distancing where citizens were obliged to stay at home unless for work or buying daily necessities. Furthermore, the Vietnamese government also implemented a nationwide lockdown starting from April 1 until April 22, except in Hanoi that will be extended until April 30. As citizens were staying at home, local converters reported to SSESSMENTS.COM that the consumption for finished products diminished, except for essentials products. Due to the travel restriction and fewer tourists visiting the country, Vietnamese converters stated the demand for beverage drinks have decreased as well following the less consumption. Hence, the demand for resins was slowing down as well.
Further added to SSESSMENTS.COM, the Vietnam government decided to ease the social distancing measures on April 23 as there were no new Coronavirus cases in the sixth consecutive day as of April 22. The government stated that some shops and services will be allowed to reopen. Although some cafes had reopened, the streets were still fairly quiet.
Due to the slow digestion rate, local converters were reported to have reduced their production rates as well as the buying quantity. A Vietnamese converter reported that the company’s buying quantity had been reduced to only 2 tons or a few hundred kilograms per purchase just to maintain relationships with the suppliers. Usually, the converter will take up to 10 tons per purchase. Another converter also revealed to SSESSMENTS.COM that the company has cut down buying quantity as well. Usually, the converter will purchase up to 5 containers per month, however, the number decreased to only 3-4 containers per month amid the Coronavirus pandemic. As the number of purchases from the converters decreased, the sales achievement from the traders’ end were also decreasing. A global trading house stated that the sales from the company’s end have decreased significantly. Normally, the trader managed to sell a few hundred tons per day. However, the number of sales dropped to only 10-20 tons per day following the Coronavirus outbreak. A local PVC producer also pointed out that the demand in April decreased around 15-20% compared to March due to strict social distancing regulations and citizens were obliged to stay at home unless for work or buying daily necessities. Meanwhile, another local PVC producer stated that the demand from the company’s end has been decreasing while it is supposed to be picking up around this time of the year. To the export market, converters were also facing difficulties as their end products destination countries were also affected by the Coronavirus pandemic.
Further added, local factories in Northern Vietnam had halted the production activity and workers were going back to their hometown to control the spreading of the virus following the strict social distancing applied by the government. Around 70% of employees are asked to take turns for paid leaves and supported with unemployment benefits from around VND2,500,000 ($106) per month. However, SSESSMENTS.COM was told some small companies asked the employees to take leaves without being paid. Thus, there are a number of citizens who are out of a job and they would limit the monthly spendings. This also explained why the sales for finished products have decreased as citizens are either too fearful to go out afraid of being infected or unable to go out and spend. However, not all products were affected by pandemic, the data showed that the sales for dairy, packaged foods and personal care products such as hand sanitizers, bar soaps as well as household cleaning products maintain strong as citizens are getting more aware of hygiene and health issues and avoid any celebration or mass gathering.
Although the government has a fairly efficient way of curbing the Coronavirus spreading, its impact on the economic sector is inevitable. One of the most prominent effects seen in the tourism and transportation industry, SSESSMENTS.COM was informed. In order to curb the spreading of Coronavirus, the Vietnam government has imposed travel restrictions. As such, tourists were canceling flights as well as hotels, which also impacts the income of citizens with business related to tourist attractions. According to the Asia Development Bank’s data, Vietnam’s GDP growth expected to slump to 4.8% as an economic activity has been disrupted due to the pandemic. By the first quarter of the year, around 35,000 companies in Vietnam went bankrupt as the business was affected by the pandemic. To overcome the problem, the government launched $10.8 billion credit support packaged in early March as an incentive. Hence, in 2021, the GDP growth is expected to rebound to 6.8% if the pandemic is fully handled by the first quarter of 2020. As such, Vietnam's economy is considered to be the fastest growing among the Southeast Asian countries despite the Coronavirus pandemic.
Although the Coronavirus pandemic has been handled, some said that it will take a long time for the economy to be fully recovered as there will be businesses that need incentive to start the business again. Sources also expressed an opinion to SSESSMENTS.COM that the economic sector won’t be fully recovered unless the vaccine for COVID-19 has been found. Hence, the economic condition will certainly affect the polymers demand in the second as well as the third quarter of 2020.
