Vietnam's Economy in the Wake of Covid-19 ; ISEAS Perspective ; Issue: 2021 No. 41
Macroeconomic stability in 2020 was negatively affected by Covid-19 in 2020, although inflation remained low under 4 per cent. The budget deficit increased sharply (from 3.36 per cent of GDP in 20196 to 4.49 per cent of GDP in 20207) due to an increase in government spending for pandemic-related financial support for citizens and businesses. Accordingly, debt indicators for 2020, namely public debt (as percentage of GDP), foreign debt (as percentage of GDP), government debt payments to total budget revenue, and foreign debt repayment (as percentage of total exports) all increased compared to the previous year (see Graph 2 below). Covid-19 has affected all aspects of socio-economic development such as economic growth, trade activities, labour, employment, and income of workers. To mitigate this disruption, the Vietnamese government has implemented a series of timely and strong measures aimed firstly to limit the spread of the virus and then secondly to promote economic development. The measures have shown initial success at controlling the spread of the virus, with Vietnam having come close to completely halting local transmission.