European business confidence in Vietnam drops to historic low
European business confidence in Vietnam drops to historic low
The Business Climate Index of European companies in Vietnam fell to 26 percent in the first quarter due to the Covid-19.
A woman rides a bicycle in a deserted square next to Hoan Kiem Lake, Hanoi on March 26, 2020 amid the coronavirus pandemic.
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This is the lowest level recorded since the quarterly index was first introduced in 2010, according to the European Chamber of Commerce (EuroCham).
The plunge from 77 percent recorded in the fourth quarter last year showed the novel coronavirus pandemic has directly impacted European enterprises, EuroCham stated Wednesday.
Over 90 per cent of business leaders said the pandemic negatively impacted their enterprise, with over half reporting a ‘significantly’ negative result.
Eight out of ten respondents report higher costs from measures taken to protect workers and prevent the spread of the virus.
One out of four business leaders anticipate they would lose over 50 percent of revenue.
EuroCham Chairman Nicolas Audier said: "This data shows Covid-19 is having a deep and serious impact on European business in Vietnam. It is creating unprecedented challenges for businesses of all shapes and sizes and across all sectors and industries."
European businesses anticipate more challenges in the second quarter as the virus shows little sign of slowing down globally.
Nearly four out of ten companies with over 100 employees anticipate the situation in the second quarter to be "very poor."
Most executives say Vietnam’s economic outlook in the second quarter would deteriorate, with up to 24 percent of their labor force unemployed.
Another survey released Tuesday shows 82 percent of German businesses in Vietnam will adjust their revenue targets downward due to the pandemic.
Six out of ten companies are set to lose 10-50 percent of revenue, and no company expects revenue growth this year, the Association of German Chambers of Commerce and Industry survey revealed.
Due to travel restrictions, a disrupted supply chain and cancellation of contracts, half of respondents are rescheduling new investment intensions due to the outbreak.
27 percent rate their current situation in Vietnam as good, compared to 77 percent last year.
But 72 percent of companies intend to keep investing in Vietnam, as the EU-Vietnam Free Trade Agreement (EVFTA), to become effective this year, boosts economic growth.
Vietnam’s GDP growth hit roughly 3.82 percent in the first quarter, the lowest since 2010, due to the coronavirus impact, according to the General Statistics Office. It was lower than the earlier worst case scenario forecast of 5.96 percent for the whole year by the Ministry of Planning and Investment.
ADB in early April predicted that the pandemic could see Vietnam’s growth slow down to 4.8 percent this year, but it will remain among Asia’s fastest growing economies.
Last year, GDP expansion hit 7.02 percent, the second highest growth figure in the last decade, after the record 7.08 percent in 2018.
