VIET NAM NATIONAL UNIVERSITY HO CHI MINH CITY

UNIVERSITY OF ECONOMICS AND LAW

SUBJECT: ADVANCED MACROECONOMICS

TOPICS: ANALYSE AND EVALUATE THE MACRO POLICIES

VIETNAM HAS EMPLOYED TO DEAL WITH ECONOMIC
CHALLENGES CAUSED BY COVID-19

Lecturer : Dr. Nguyen Anh Phuong

Team member :

Student’s Name Student’s ID

Trần Nguyễn Diễm Kiều K214132029
Lê Vũ Hằng K214132026
Trần Anh Thư K214132045
Trần Trương Kim Ngọc K214132033
Trần Võ Thanh Thảo K214132043
 TABLE OF CONTENTS
I. INTRODUCTION........................................................................................................3
1. Challenges Vietnam Faces Post-COVID-19............................................................3
2. Challenges Vietnam Faces Post-COVID-19............................................................3
3. Purpose of This Report.............................................................................................3
4. Main Discussions......................................................................................................3
II. MAIN CONTENT........................................................................................................3
1. Measures Vietnam Employs to Curb Economic Challenges....................................3
1.1. Government Measures to Address Economic Challenges:...............................4
1.2. Healthcare solutions:.........................................................................................4
1.3. Solutions to Improve the Tourism:....................................................................4
1.4. Solution to the Unemployment problem:..........................................................4
2. Discuss and analyze each macro policy employed by Vietnam’s authorities..........5
2.1. The Impact of COVID-19 on Vietnam's Economy:..........................................5
2.2. Government Policies to Mitigate Economic and Social Impacts:.....................5
2.3. Monetary Policy and Banking Support:............................................................6
3. Evaluation of Policy Effectiveness and Proposals for Improvement.......................7
III. CONCLUSION........................................................................................................9
1. Challenges from the Pandemic.................................................................................9
2. Macroeconomic Policy Contributions......................................................................9
IV. REFERENCES.........................................................................................................9
V. APPENDIX.................................................................................................................11
I. INTRODUCTION
1. Challenges Vietnam Faces Post-COVID-19.
The Covid-19 pandemic has profoundly affected countries worldwide, leading to
negative GDP growth, record unemployment, and widespread business closures. The
pandemic has impacted various sectors, including health, transportation, tourism,
education, and trade, creating a complex web of challenges for recovery. In Vietnam, the
tourism sector faces significant setbacks, with hotels, restaurants, and transport services
halted due to lockdowns. Despite a high vaccination rate, challenges remain in
maintaining healthcare access. Around 15% of businesses reported a 50% revenue drop
since 2019, and over half have reduced logistics services by 10-30%.

2. Challenges Vietnam Faces Post-COVID-19.

Vietnam swiftly responded to COVID-19 with a "dual task" strategy, balancing public
health and economic recovery. The government provided financial support to businesses
and leveraged technology in tourism management. Domestic travel was prioritized,
revitalizing the tourism sector, which had suffered from global disruptions. Rigorous
disease control efforts earned Vietnam international praise for its efficient, low-cost
response. This approach not only stabilized the economy but also strengthened
confidence in the country’s socio-economic future and healthcare resilience. The
successful containment and recovery showcased Vietnam’s adaptability during the global
crisis.

3. Purpose of This Report

This report analyzes Vietnam's macroeconomic policies in response to COVID-19,
focusing on key measures implemented to stabilize the economy and support vulnerable
groups. It assesses the effectiveness of these policies, identifies challenges in execution,
and provides recommendations to strengthen economic resilience. The evaluation is
essential for understanding how well the policies have facilitated recovery and offers
insights for refining future economic strategies and ensuring effective responses to
ongoing and future challenges.

4. Main Discussions
The main discussions will revolve around evaluating the measures taken by the
government, analyzing their impact, and proposing potential policy improvements.

II. MAIN CONTENT

1. Measures Vietnam Employs to Curb Economic Challenges.

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 1.1. Government Measures to Address Economic Challenges:

Post-pandemic, Vietnam's government implemented several strategies:

 Infrastructure investment: Accelerated projects in transportation, energy, and

technology to create jobs and stimulate growth.
 Business support: Provided financial aid, tax deferrals, and loan programs,
especially for SMEs.
 Boosting exports: Leveraged free trade agreements to expand markets in key
sectors like electronics, agriculture, and manufacturing.
 Domestic consumption: Promoted local goods and stabilized prices to restore
consumer confidence.
 Labor and social support: Assisted unemployed workers and expanded social
security for vulnerable groups.
 Digital transformation: Promoted innovation in e-commerce and FinTech.
 Environmental focus: Encouraged green projects and renewable energy.

These steps are aimed at immediate recovery and sustainable long-term development.

1.2. Healthcare solutions:

Vietnam’s comprehensive COVID-19 response supported citizens and frontline workers

with financial aid, mask distribution, and essential supplies. The government focused on
testing, isolation, treatment, and vaccination, along with promoting the 2K guidelines.
Healthcare improvements included policy reviews, enhanced benefits for workers, and
ensuring adequate medical supplies. Additionally, digital transformation in medical
services and administrative reforms boosted efficiency, contributing to a well-functioning
healthcare system during the pandemic.

1.3. Solutions to Improve the Tourism:

To strengthen tourism, Vietnam focused on:

 Promoting regional linkages to diversify tourism products and leverage local

strengths, attracting more tourists.
 Providing tax and loan support to help tourism businesses adapt.
 Simplifying administrative processes to enhance operational efficiency.

1.4. Solution to the Unemployment problem:

Unemployment threatens both social stability and economic growth. Addressing it

requires:
  State: Increase investment in production and business sectors, create jobs, loosen
financial policies, and reform administrative procedures to attract foreign
investment.
 Businesses: Encourage workers to return with supportive policies, restore
operations, and recruit young workers with training to address labor shortages.
 Workers: Stay calm, communicate with employers about difficulties, and
coordinate with local authorities and businesses to receive COVID-19 vaccines,
ensuring a safe return to work.

2. Discuss and analyze each macro policy employed by Vietnam’s

authorities.
The year 2021 was challenging but also demonstrated Vietnam's resilience and
adaptability in gradually restoring socio-economic activities under "new normal"
conditions.

2.1. The Impact of COVID-19 on Vietnam's Economy:

· Economic Growth: In 2020 and 2021, Vietnam's growth rates were 2.91% and
2.58%, respectively, the lowest since 1991. However, Vietnam managed to
maintain positive growth compared to many other countries.
· Affected Sectors: The industrial and construction sectors grew by only 4.05%,
and the service sector by 1.22%, both significantly lower than pre-pandemic
levels. Industries like tourism, hospitality, and retail were heavily impacted.
· Investment and FDI: Total social investment capital grew by only 3.2%, while
realized FDI decreased to $19.74 billion, a 1.2% decline.
· Labor Market: The unemployment rate rose to 3.22%, the highest in a decade,
with urban unemployment at 4.42% and rural at 2.48%.

2.2. Government Policies to Mitigate Economic and Social Impacts:

 Implemented fiscal and policy measures for post-pandemic recovery.

 Focused on revenue management and tax debt recovery, benefiting sectors like
banking, real estate, and import-export.
 Prioritized COVID-19 prevention and citizen support, cutting non-essential
expenses.
 Provided tax relief and waived penalties, totaling 138 trillion VND in support.
 Issued resolutions for tax reductions, financial aid, and social stability with a
4.3% of GDP stimulus package.
 Directed interest rate cuts, saving 15.56 trillion VND.
 Accelerated public investment in infrastructure and restructured state-owned
enterprises for efficiency and budget revenue.

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 2.3. Monetary Policy and Banking Support:

Figure 1: Figure: 2.3. Vietnam Inflation Chart Over the Years

Vietnam maintained stable inflation, with 2021 inflation at 1.84% and 2022 inflation
at 3.21%. Expansionary policies were applied, including:
· Ensuring Liquidity: The State Bank supported liquidity by purchasing foreign
currency and bonds, lowering interbank interest rates to 0.5%-0.9%, reducing lending
costs.
· Maintaining Low Interest Rates: The State Bank reduced policy interest rates three
times in 2020 (by 1.5% - 2%) and continued to keep rates low in 2021. By the end of
September 2021, average mobilization and lending rates had decreased by 0.46% and
0.72% per year, respectively.
· Ensuring Credit Supply: The State Bank flexibly adjusted the credit growth target
based on quality, ensuring sufficient capital for production and business without
causing inflation. The 2021 credit growth target was 12%, adjusted according to
actual conditions.
· Stabilizing Foreign Exchange Market: Maintained a stable VND/USD exchange
rate and ensured market liquidity despite global monetary tightening.
· Supporting Businesses and Citizens: Issued circulars for debt restructuring, interest
rate waivers/reductions, and 0% interest loans for wage payments.
· Waiving/Reducing Payment Service Fees: Reduced fees for businesses and citizens,
amounting to 1.557 trillion VND in savings.
These efforts emphasize the vital role of the banking sector in supporting the economy
during the pandemic, despite challenges like increasing bad debts and high provisioning
costs.

The government’s fiscal, monetary, and social welfare policies helped prevent a deep
recession. Unlike previous crises, COVID-19 required the government to implement
recovery policies and mitigate adverse impacts on economic and social development.

Southeast Asian countries have been quick to implement policies to address the decline in
GDP growth caused by the COVID-19 pandemic. ASEAN countries often use two tools:
easing monetary policy or implementing economic stimulus packages. Some countries
combine monetary, fiscal and investment support measures to achieve the highest
efficiency.

Monetary easing must be implemented cautiously to avoid inflation when the economy
recovers. Fiscal support policies should focus on targeted spending, cost-saving
measures, and support for those who really need it. In addition, it is important to ensure
transparency and accessibility of support policies.

3. Evaluation of Policy Effectiveness and Proposals for Improvement.

Figure 2: Figure 3. Revising a country's GDP growth forecast due to the COVID-19
pandemic.

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Policy Evaluation:

 Pandemic Control: Vietnam's success in controlling COVID-19 through testing,

isolation, and contact tracing allowed the economy to maintain positive growth.
However, prolonged isolation measures negatively impacted domestic
consumption and businesses.
 Economic Support: Financial aid packages for businesses and workers helped
alleviate immediate hardships. However, ongoing monitoring is needed to ensure
long-term business recovery.
 Export Focus: Vietnam managed to sustain export levels, particularly with key
partners like the U.S., China, and the EU. Still, this reliance makes the economy
vulnerable to external shocks, especially from slowdowns in the U.S. and EU.
 Digital Transformation: Efforts to digitize healthcare and administration
improved management efficiency but require broader implementation for
sustainable impact.

Proposed Future Policies:

 Accelerate Digital Transformation: Expand technology adoption in public

services and the private sector to reduce operational costs and boost efficiency.
 Boost Domestic Economy: Strengthen internal demand by encouraging domestic
consumption and supporting local businesses.
 Enhance Social Safety Nets: Provide long-term support for workers and
industries hit hardest, particularly in tourism and services.
 Selective FDI: Attract foreign investment in high-tech, renewable energy, and
clean manufacturing for sustainable development.
 Improve Competitiveness: Invest innovation and workforce quality to meet the
demands of a post-pandemic economy.

III. CONCLUSION
1. Challenges from the Pandemic
The COVID-19 pandemic caused severe economic and social disruptions in Vietnam,
including negative GDP growth, high unemployment, and widespread business closures,
especially in tourism. Key challenges were revenue losses and disruptions to healthcare
and trade. In response, Vietnam adopted a dual-task policy focusing on public health and
economic recovery, prioritizing domestic tourism and financial support for affected
sectors. The government also leveraged technology to revitalize tourism, enhancing
resilience, stabilizing the economy, and boosting confidence in future socio-economic
development.
 2. Macroeconomic Policy Contributions
Macroeconomic policies have been implemented as disease control measures, including
testing, to help maintain stable growth. Economic support policies, through tax reductions
and preferential loans, have assisted many businesses in overcoming difficulties. Flexible
monetary policies, with lower interest rates and maintained liquidity, not only stabilize
finances but also help control inflation. Export policies have allowed Vietnam to sustain
export growth, especially in major markets such as the United States and the EU, while
also creating dependence on external markets. Finally, the transformation through e-
commerce and key actions has enhanced management efficiency, reduced costs, and
improved performance, contributing significantly to a comprehensive economic
recovery.

IV. REFERENCES
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content/tap-trung-khac-phuc-hau-qua-dai-dich-covid-19-no-luc-cao-nhat-phuc-hoi-va-
phat-trien-kinh-te-xa-hoi-dat-nuoc

Báo Chính phủ. (2022, October 22). Kinh tế Việt Nam bứt phá sau đại dịch. Báo Chính
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Ministry of Health. (2021). Vietnam's healthcare response to the COVID-19 pandemic.

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V. APPENDIX