Hanoi’s economic performance in the first eight months of 2021 has been encouraging despite the city-wide stay-at-home order adopted since July 24.

“Drastic measures to contain the Covid-19 pandemic along with the positive responses from the local business community have been the key factors for achieving such results,” Economist Nguyen Minh Phong told The Hanoi Times.

During the eight-month period, Hanoi’s index of industrial production (IIP) rose by 6.3% year-on-year, in which the manufacturing and processing, accounting for 96.5% of total production value, expanded by 6.3%.

Production at Sunhouse's manufacturing plant in Hanoi. Photo: Hai Linh

Subsectors that grew sharply during the period included motorized vehicle production (up 21.6% year-on-year); garment (18.2%); beverage (16.1%); wood and wooden products (10.9%); paper production (10.5%); and computers and optical products (8%).

“Most enterprises and manufacturing facilities have been trying to maintain operation by adopting the 3 onsite principles, or taking a break between working shifts to avoid risks of infection,” noted the municipal Statistics Office in a monthly report.

At present, a total of 70 industrial parks, home to 4,169 enterprises and 62,000 workers, are still operational. The city also reported the majority of enterprises have strictly complied with anti-Covid-19 measures, in which 1,077 large-scale enterprises have had their restriction plans approved by local authorities.

Phong also pointed out growing state budget revenue in January-August, reaching 70.3% of the government’s target and representing an increase of 11.1% year-on-year.

Along with support from the authorities to aid the economic recovery process, the banking sector in Hanoi has restructured debt payment for nearly 58,000 customers with a combined outstanding loan of VND75 trillion ($3.3 billion), while 178,000 others have been subject to waiving or freezing payment of lending rates worth VND254.2 trillion ($11.16 billion).

To date, credit institutions and banks in Hanoi have provided loans at preferential rates for 97,700 customers worth VND965.5 trillion ($42.4 billion).

Hanoi has also been one of the top destinations for foreign investors with registered capital of $841.8 million, of which the authorities have approved 243 fresh projects with $157.3 million.

The capital city is currently ranked second nationwide in terms of attracting new FDI projects, accounting for 21.5% of the total, only behind Ho Chi Minh City which makes up 34%.

No doubt the pandemic has caused severe economic consequences as the number of newly registered businesses in the city suffered a decline of 7% in August to 16,600, nearly 7,500 have resumed operation or a surge of 72% year-on-year.

Positive economic prospects

Anticipating difficulties ahead, the Hanoi People’s Committee has set up two growth scenarios for the last six-month period.

In the first case, the city targets a GRDP growth of 7.5% for 2021, which would require economic growths of 8.59% in the third quarter and 9.12% in the final.

Meanwhile, a less optimistic scenario would see Hanoi reach a GRDP of 6.5-7% as the pandemic is only contained in the third quarter.

“At the time when the World Bank predicts Vietnam’s GDP growth to reach 4.8% in 2021, two percentage points lower than its previous forecast, these figures demonstrated efforts and responsibilities of Hanoi in contributing to the overall growth,” Phong added.