Throughout the pandemic, Vietnam managed to keep the numbers of infections relatively low in comparison to other countries and was globally praised for its coronavirus response. Vietnam recorded just 1,465 infections and 35 deaths in 2020, while its economy was one of the few in Asia that saw growth last year.

However, the country is now currently experiencing its toughest wave of the pandemic with around 96% of Vietnam’s total of 470,000 cases recorded after July 1st 2021. Authorities are locking down entire buildings, streets, districts and cities while closing businesses to stop the spread. Enforced regulations prevent people from leaving their homes and only selected categories of individuals, qualified as essentials, are allowed to travel for business reasons. Hoh Chi Minh City (HCMC) had enforced a curfew from 6pm to 6am, leaving limited access to groceries stores and markets, with only online orders are allowed in the designated red zones, while deliveries of food and essential items are provided by the People’s Army of Vietnam.

Manufacturers are struggling to maintain the “three-on-spot” production strategy, meaning “work – eat – stay” at the company facilities. Most workers were glad to enter these arrangements for health reasons, staying in a bubble of constantly tested people and higher priority on receiving a vaccination, along with earning higher wages as opposed to being on a lower wage rate or none at all. However, after a month, the feeling of isolation and monotony has grown especially considering that people still need to spend time at home in order to care for their families. Should the situation continue, the exhaustion of the workforce may occur as not all workers are able or willing to spend months within a factory.

The new threat now is related to the shortage of vaccine doses. In the last months, Vietnam received an influx of 2 million vaccines pledged by the US, during the visit of the Vice President Kamala Harris in Hanoi. China has also donated or sold around 120 million vaccines to Southeast Asian states.

The EU, meanwhile, has provided around USD 3.5 billion for the COVAX program — which aims to provide free vaccines to low and middle-income countries. Countries like Poland, Hungary, France, the Czech Republic, Romania and Italy have donated Covid-19 vaccines and medical equipment to Vietnam in the past few weeks with Vietnam now the EU’s 15th-largest trading partner and its largest in Southeast Asia.

On August 25th, the Italian Government donated 801,600 doses of AstraZeneca via COVAX. Currently, Italy is the EU’s second biggest contributor to COVAX, with a commitment to provide 15 million doses of the vaccine and 359 million USD. As a development partner of ASEAN, Italy recently pledged to donate an additional 2 million USD to the dedicated fund.

Major US companies whose supply chains in Vietnam have been affected by the surge in infections in the country, have lobbied the US government to donate vaccines to Vietnam. More than 90 brands have jointly written to US President Joe Biden urging him to make more COVID-19 vaccines available to Vietnam because of the country’s importance in their supply chains.

Leading brands, including Gap, New Balance, Nike, PVH Corp, VF Corp, Adidas, ASICS, Levi Strauss & Co, Patagonia and Ralph Lauren – all members of the American Apparel and Footwear Association (AAFA) have signed the letter.

The most recent data from August proves that the impact is significantly more severe than that experienced during the three-week national lockdown in April 2020. On the domestic front, private consumption saw a substantial hit, as mobility fell by as much as 60% on average from pre-pandemic levels, which resulted in a 40% year-on-year reduction in retail sales.

HSBC’s CEO Tim Evans has forecast two scenarios for Vietnam’s economy until the end of the year. Depending on the speed and effectiveness of the vaccination rollout, the re-opening of the economy and the recovery and resumption of major export market the country’s GDP would grow by 5-5.5%. However, if the vaccination program is not administered quick enough and lockdown and social distancing drag on, there will be more of an adverse impact to the economy and increased pressure on supply chains, and GDP may only grow by 3.5-4%.