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Uncertainties still persist, particularly with recent delays in vaccine delivery. The first shipment of vaccines from the COVAX initiative has been delayed from late March to mid-April. Domestically, the weak labour market remains a headwind for reviving private consumption.

HSBC Points out the Risks that Vietnam’ Economy Faces
Photo Credit: Reuters
Although Vietnam remains on a fast track to economic recovery, there are notable risks still looming. First and foremost is its likely prolonged vaccination roll-out, which may delay its tourism recovery. Vietnam is expected receive 150 million doses of vaccines to inoculate 70% of its population in 2021 (Hanoi Times, 24 March 2021). 
However, uncertainties still persist, particularly with recent delays in vaccine delivery. The first shipment of vaccines from the COVAX initiative has been delayed from late March to mid-April (Vietnam News, 24 March 2021). 
Still, there are also local vaccine production initiatives: Vietnam’s first home-grown vaccine Nanocovax, is expected to be available by 4Q21 and put into use in 2022 (CNA, 17 March 2021), likely accelerating the vaccine roll-out.
Domestically, the weak labour market remains a headwind for reviving private consumption.
While unemployment rates have dropped since 3Q20, a large part of Vietnam’s labour market remains in the informal sector, which may not be captured in formal employment statistics.
Thus, supporting vulnerable businesses and workers remains a key task. 
Vietnam has become a growing manufacturing base for electronics goods…
…thanks to consistent FDI inflows from tech giants
New FDI has been flocking into the country since the 2010s, with the lion’s share concentrated in the manufacturing sector--accounting for 4-6% of GDP.
Much of the investment initially entered the low-value-added textile and footwear space, however, Vietnam has proved its capability of climbing up the value chain over the years.
Electronics exports reached a record of USD96bn in 2020, or 34% of its total exports. Yet, it was only less than USD1bn in 2000, accounting for 5.5% of total exports.
While China remains a dominant phone exporter… …Vietnam’s global share has been increasing in recent years
Much of the tech success is thanks to Samsung’s multi-year FDI in Vietnam, which started as early as late 2000s, turning Vietnam into its key production base.
With investments of over USD17bn over the years, Samsung now has six plants in Vietnam, including two phone factories in the North, producing half of its smartphones and tablets (Hanoi Times, 29 January 2021).
The trend is particularly evident in the remarkable growth in Vietnam’s January and February exports. After smoothing out Tết distortions, a key driver of economic growth was booming smartphone exports, given the recent release of Samsung’s flagship Galaxy S21.
Domestic transport costs are expected to rise… …however, the impact should be offset by moderating food prices
In Vietnam the Ministry of Industry and Trade and Ministry of Finance usually review domestic petrol prices and make adjustments in accordance with global oil price fluctuations every two weeks.
The recent oil price increase will thus eventually feed through into local consumer costs. As such, we expect some upside pressure from higher transport prices this year.
That said, this is likely to be offset by slower growth in food prices, given that energy has a smaller CPI weighting of only 10% as opposed to 34% for food.

DIEP NGUYEN