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REVIEW of FINANCE - Issue 4, 2021

THE IMPACT OF COVID-19 ON FINANCIAL SECURITY

IN VIET NAM

DO HONG VIET
Abstract: The COVID-19 pandemic has severely damaged the economy of Viet Nam in the past two years. The bad developments of the
economy, together with the huge expenditures of the Government on epidemic prevention and control, can adversely affect financial
security. In addition, instability can also come from within the financial system with the increase of risks in the banking system, the
financial market and the financial crimes. In order to ensure financial security in the current period, the most important task is to
create conditions for businesses to restore production and business, create jobs, increase revenue for the Government, reduce non-
performing loans, make economic and financial relations healthy in order to bring the economy back to the growth trajectory.
Keywords: COVID-19, financial security, financial market, economic recovery

Received: October 8 , 2021
th
th
Revised: November 16 , 2021 of the nation - in the third quarter of 2021 decreased by
Accepted: December 3 , 2021 more than 24.39%, and for the January-September 2021, it
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reduced by 4.98%.
1. Introduction According to some warnings of international
organizations, if GDP declines for 2 consecutive quarters,
The COVID-19 pandemic has had a great impact on it can be considered a sign of recession, and if GDP
the economy of Viet Nam, affecting not only production declines by 10%, it will fall into a crisis. Therefore, if
and circulation of goods and services, but also financial Viet Nam's GDP in the fourth quarter of 2021 does not
security in Viet Nam. In 2021, after implementing large- improve but continues to decrease, the economy may fall
scale social distancing many times, production and into recession. Negative economic growth in the third
business activities of enterprises were severely affected, quarter of 2021 was mainly due to widespread social
jobs and incomes of people were not guaranteed, and the distancing measures, disrupting production, circulation
economic situation declined sharply, leading to negative and consumption of goods and services.
impacts on financial security in Viet Nam. After the pandemic was basically controlled and when
Although the first two months of the fourth quarter the economy showed signs of recession, on October 11,
of 2021 have recorded many signs of improvement in 2021 the Government of Viet Nam issued Resolution No.
epidemic prevention and economic recovery, it is not 128/NQ-CP on safety, flexibility, and effective control of
clear when the epidemic will be completely controlled COVID-19 epidemic, bringing many positive results. The
as new coronavirus variants continue to appear. index of industrial production in October and November
Therefore, it is necessary to note a number of risks that continuously increased comparing to the previous
may adversely affect financial security, and propose months. In 11 months of 2021, the index of industrial
solutions to adjust to ensure financial security in Viet production increased by 3.6% over the same period in
Nam in the coming time. 2020. The number of re-operated enterprises also increased
comparing to previous months (SBV, 2021). This is a very
2. Risks to financial security of Viet Nam under timely and effective solution to revive the economy after
the impact of COVID-19

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Negative economic growth in the third quarter of 2021 FIGURE1: GDP GROWTH RATE IN THE 3 QUARTER
OF 2017-2021
According to a report by the General Statistics Office
of Viet Nam, the gross domestic product (GDP) in the
third quarter of 2021 was estimated to decrease by 6.17%
over the same period last year, the deepest decrease since
Viet Nam calculated and announced quarterly GDP up to
now. In which, the industry and construction sector, and
service sector decreased by 5.02% and 9.28% respectively
(GSO, 2021). In particular, the Gross regional domestic
product (GRDP) of Ho Chi Minh City - the locomotive Source: General Statistics Office of Viet Nam (2021)

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