The economic shock from the Wuhan pneumonia pandemic is far more serious than the 2008 financial crisis.
Financial experts in the US said the Wuhan pneumonia disease in the US could have far more profound and negative economic impacts than the 2008 financial crisis.
As soon as the pandemic broke out, the restaurant, hotel, passenger transportation and tourism industries … continued to be directly affected by the disease.
But so far, the situation has escalated to the point where people are recommended not to leave their houses, it becomes a consumer story with greater influence. Families stop spending, shops, restaurants stand out, and other big consumer spending was also affected, such as real estate. Businesses laid off or gave employees a break, people’s income will decrease … That is a chain of domino-influenced effects of the disease.
In an indication of the negative impact of the disease on the economy, the number of people filing for unemployment claims in the US increased to the highest level in the past two and a half years of 281,000 applications last week, the US Department of Labor said as of 19/3 while restaurants, bars and hotels massively fired employees for business activities stagnated.
President of the US Senate on March 19 introduced an emergency bill to curb the negative economic consequences caused by the Wuhan pneumonia pandemic.
Republican and Democratic senators agreed to meet on March 20 to seek consensus.
In the face of the negative effects of the Wuhan pneumonia pandemic, the US economy needs a timely and drastic relief package of up to $1 trillion to avoid the risk of recession.
The Trump administration is pushing a $1 trillion stimulus package to help the country overcome the economic crisis caused by Wuhan pneumonia. This could include a direct support fund of $1,000 for each American along with a $50 billion loan for heavily affected airlines at risk of bankruptcy and steps to stabilize the economic platform and new support for health care workers and Wuhan pneumonia patients.
Professor-Dr Khuong Huu Loc, a financial-economic expert in the state of Texas, said: “The amount of money to rescue big banks in 2008 was less than $1 trillion but this time [the effect] spreads more widely, is because this money will put the most into airlines, restaurants and small businesses.”
Consumption accounts for three-fourths of the US economy’s proportion and of these 75% are concentrated in the service sector. So most of the bailout needs to be directed to ordinary people to boost consumption, thus creating a spillover effect in the economy.
On the other hand, the Government also needs to determine which companies really need support to avoid “wasting” funds.
In Vietnam, the consequences of the pandemic on the domestic economy are increasingly heavy. In the latest development, when Western countries closed the border to control the pandemics, a series of EU and US businesses decided to stop importing Vietnamese textiles and garments.
The Ho Chi Minh City Embroidery Association said that Vietnam’s largest textile and garment export market, the US, has announced to stop importing garments from Vietnam in the next 3 weeks. Earlier, importers from the EU also announced to stop importing textiles within 1 month.
The main trend of the partners is to delay delivery time in March, delay orders in April and May, and temporarily not negotiate orders from June onwards.
The United States and the EU are two major and important textile export markets of Vietnam. Data from the General Department of Customs shows that in 2019, textile exports to the US accounted for 45.2% of the country’s textile and apparel export turnover. In the first 2 months of this year, textile and garment were still one of three export commodity groups reaching the billion USD mark to the US, hitting nearly $2.25 billion. With the EU market, in 2019, the bloc imported $4.3 billion of textiles and garments from Vietnam, an increase of 4% over the previous year. The EU market is expected to increase sharply after the EVFTA Agreement comes into effect.
Due to the heavy dependence on the US and EU markets, the import of Vietnamese textile and apparel products of these two most important markets has stopped making textile and apparel enterprises worried. The biggest challenge of exporting garment enterprises at this time is they have import raw materials but not produce. The second is imported fabric materials to make OEM / FOB orders that have paid a huge amount of capital, which was “buried” in the unknown when it was taken out. While interest on bank loans and wages workers still have to pay.
The consequences of the EU and US enterprises’ decision to stop importing Vietnamese textiles and garments are extremely serious when Vietnam’s textile and garment industry employs up to 3 million workers and has previously faced difficulties in selling in the domestic market as well as export to the markets of Korea and Japan.
The domestic market is almost paralyzed, with consumption falling by more than 80%. Many small-scale household-style garment and textile establishments which are members of Ho Chi Minh City Association of Textile, Embroidery and Knitting have ceased operations.
South Korea and Japan were two major textile and garment export markets of Vietnam when the pandemic broke out in February, temporarily suspending or dripping imports of Vietnamese textile and apparel products.
Due to the difficulty in resolving the material shortage, some other enterprises had to start letting workers take a break in order to maintain production. The ability to pay for waiting jobs of businesses can only be maintained within 2-3 months.
Experts said: “By the end of April, import partners of EU and US markets will not be able to import goods because of Covid-19, the risk of many workers in many factories being forced to leave their jobs full time is possible.”
If the situation does not improve the pressure to ensure social security is very large because the social burden can cause discontent and then convert into political – social conflict.
Statistics from the Business Registration Administration (Ministry of Planning and Investment) show that in the first 2 months of the year, there were 16,151 enterprises temporarily suspended business, up 19.5% compared to the same period last year; 2,807 enterprises completed the procedure for dissolution.
Aviation and tourism in Vietnam are increasingly suffering from severe consequences caused by Wuhan pneumonia disease.
Aviation is one of the industries heavily damaged by the Covid-19 epidemic. According to the forecast of the Vietnam Aviation Administration, the complicated situation of the pandemic may affect the revenue of Vietnamese airlines about VND25 trillion, equivalent to over $1 billion in 2020. In particular, Vietnam Airlines expects revenue to decrease by VND12.5 trillion, Jetstar Pacific expects to reduce revenue by about VND 732.8 billion.
Facing that situation, Vietnam Airlines said it had to negotiate with workers so that they could take unpaid leave for a while. Along with that, the leadership salary is reduced by 40%.
Due to reduced demand for travel, the young but recently developed “fast” airline thanks to strong financial backing by FLC Group, Bamboo Airways, is also negatively affected by the Covid-19 incident. Many Bamboo Airways routes have been reduced or temporarily stopped.
Meanwhile, stopping the exploitation of Chinese and Korean markets … made Vietjet, although not disclosing specific damages, also suffered heavily.
Along with aviation, tourism is in the group most heavily affected by the disease.
According to the Deputy General Director of the General Department of Tourism, Le Hoai Chung, Vietnam’s tourism industry is expected to suffer losses $6 billion-$7 billion. Many tourism businesses are in a state of “exhaustion” due to record-breaking tourists.
Facing the serious economic situation, domestic public opinion said that the Vietnamese government should have an overview plan including socio-economic – epidemic prevention, not just pandemic prevention and propaganda as today.
The first time chairing the meeting of the Politburo on Wuhan pandemic prevention on March 20 after more than 2 months since the disease appeared in Vietnam, General Secretary-President Nguyen Phu Trong said that Vietnam’s “highly appreciated” achievements in the prevention of Wuhan pneumonia over the past period have shown “superiority” and “good nature” of invention.
After a long absence in the media, the head of the Communist Party emphasized: “Obviously, the foreign press and media praised, if there was no political system like Vietnam, it would not have been done.”
Learning from the experiences of ‘disappearing’ whenever there is an event of the country causing people to be discontent or bewildered like the Special Zone Law, 4 months Chinese ship operating deep in Vietnamese waters, the crisis led to the Dong Tam massacre, or the opening of schools in the flu …, this time the Party and state leader appeared but still with the arrogance of the Communist Party continued to praise the achievements of anti-pandemic as propaganda had done all the time. Last time, at the same time ignore the terrible consequences that Wuhan pneumonia is and will impact on the country’s socio-economy.
While in the US is planning to spend $1 trillion to bail out the economy to overcome the consequences of epidemics, Germany and France will spend EUR550 billion and EUR300 billion respectively for the same purpose, Vietnam’s communist regime has urged people to donate money for pandemic prevention and raise electricity prices and not lower taxes or lower interest rates. Instead of overcoming economic consequences with reasonable bailouts and policies like other countries are doing, Vietnam proceeds with a resolution combined with propaganda.
The Communist Party of Vietnam always propagates and “arrogantly” praises the achievements in the prevention of the disease against Wuhan pneumonia, but it cannot help the Hanoi government to overcome the heavy and negative impacts on the economy in Vietnam. country.
More than ever, Vietnam needs a democratic institution so that over 90 million people through free elections, creating the right to participate in the management and direction of the country towards the development of equality and civilization.
Hoang Lan from Hanoi – Thoibao.de (Translated)