Covid-19 outbreak in S.Korea causes further problems for Vietnam’s economy

The outbreak of Covid-19 in South Korea is predicted to cause further problems for the Vietnamese economy, according to Bao Viet Securities Company (BVSC).

Illustrative photo.

Firstly, the epidemic could lead to a sharp decrease in the number of tourists from the Northeast Asian country to Vietnam. According to 2019 statistics, tourists from China and South Korea accounted for 56% of total visitors to Vietnam.

As the number of tourists from China has already plunged on fears of Covid-19, another sharp drop in the number of South Korean visitors will be a double hit on Vietnam's tourism.

In 2019, tourists from South Korea accounted for 29.9% of the total number of foreign arrivals to Vietnam.

As of February 23, Vice Minister of Transport Le Anh Tuan said Vietnam has not considered suspending flights between Vietnam and South Korea. However, as a large number of South Korean passengers have canceled air bookings to Vietnam, airlines are reducing flights to South Korea.

In addition to tourism, Vietnam's exports and imports, which have already been harmed when the disease spreads in China, may also be more severely affected as Vietnam's exports to South Korea and China accounted for 23.2% of total export value, while Vietnam's imports from the two neighboring countries contributed 48.4% to total imports. South Korea was Vietnam’s second largest import market in 2019 at US$46.93 billion, accounting for 18.5% of total and only behind China.

Statistics from the General Department of Vietnam Customs revealed Vietnam mainly imported equipment, electronic, and machinery from South Korea for production. As a result, the outbreak in South Korea could disrupt the supply chain of raw materials for Vietnam's manufacturing and processing industry, while Samsung Vietnam, accounting for 30% of Vietnam's export value, may face shortage of input materials.

This in turn will have a negative effect on Vietnam’s exports to other countries, said BVSC.