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REPORT

Cause for concern

The latest EuroCham Business Climate Index reveals waning confidence
in Vietnam’s economy among European business leaders.

uropean business leaders have become
wary of the state of Vietnam’s economy
E as the country faces its fourth wave of
Covid-19, according to the latest European
Chamber of Commerce (EuroCham) Business
Climate Index (BCI). Prior to this fourth wave,
the BCI had almost climbed back to pre-pan-
demic levels, reaching 73.9 in the first quarter
of the year. The latest outbreak and spread
of new variants, however, saw the index shed
almost 30 points in the second quarter, to
45.8. This is a significant decline, though not
as steep as what was seen during the first
outbreak last year.
Overall, European business leaders expect
a difficult time ahead. Forty-five per cent
believe “the economy is more likely to dete-
riorate next quarter”, compared to just 4 per
cent of respondents in the first quarter.
Optimism has taken a hit compared to
the beginning of the year. Thirty-eight per
cent of respondents predicted their business
outlook would not be good in the third quarter,
while 29 per cent believe it will be good.
The fourth wave has also led to increased
pessimism about the short-term outlook for PHOTO: VIET TUAN
Vietnam’s business environment. Just one-fifth
of EuroCham members (19 per cent) believe
the economy will stabilize and improve during one-third of members and some 95,000 staff - their own staff, and this would help speed up
the third quarter, down from almost two-thirds 399 said they would be prepared to do so. vaccinations while also reducing the financial
(61 per cent) of respondents in the first quarter. With full vaccination requiring two shots, and administrative burden on the State. But
Business leaders do, however, remain con- this suggests that at least 190,000 doses would we need access to sufficient supplies.
fident about the future prospects of their be needed just to vaccinate the direct staff of EuroCham is using all the tools at its disposal
own companies. More than half (56 per cent) these companies alone. However, the true to support Vietnam in procuring enough
anticipate an improved or neutral performance number of doses required could reach over doses, and we are confident that business
in the third quarter, and 80 per cent plan to half a million if all European enterprises and confidence will rebound as soon as we can
maintain or increase their headcount and their staff are taken into account. Meanwhile, achieve mass vaccination.”
investment. This suggests that, despite the 259 of those who responded were also willing The BCI is a regular barometer of European
short-term challenges, they remain confident to cover the cost of vaccinating the families business leaders and their views of Vietnam’s
about Vietnam’s long-term prospects. of their staff members. When these dependents trade and investment environment. Conducted
are taken into account, the number of doses each quarter, it tracks the performance of
Call for mass vaccination drive required will be much higher again. EuroCham’s member companies and their
The BCI also noted the view that there is According to Mr. Alain Cany, EuroCham perceptions of Vietnam’s economic outlook.
an urgent need for Vietnam to roll out a mass Chairman, the EuroCham BCI reaffirms the Fieldwork and data collection were conducted
vaccination program. More than half of business urgent need for Vietnam to accelerate vacci- by YouGov Vietnam. “Despite the short-term
leaders (58 per cent) predicted that their com- nations. “Local lockdowns, social distancing, shock of this fourth wave, the data shows
panies will see a significant negative impact if and travel restrictions are not permanent that Vietnam’s long-term prospects remain
their staff cannot be vaccinated in 2021. Mean- solutions and will cause significant economic positive,” said Mr. Thue Quist Thomasen,
while, almost half (44 per cent) have not been harm over the long-term, as our data shows,” CEO of YouGov Vietnam. “European business
approached to prepare for vaccinations. he said. “There is no route out of this fourth leaders predict they will maintain or increase
EuroCham and its nine business associations wave without an ambitious and accelerated their staff and investment plans, even in the
asked members if they would be willing to mass vaccination program, which will enable midst of this current outbreak, which demon-
cover the cost of vaccinating their own staff. Of normal life to resume. European companies strates continued confidence in Vietnam’s
the 430 who responded - representing around are prepared to cover the cost of protecting trade and investment environment.” %

AUGUST 2021 | VIETNAM ECONOMIC TIMES | 5