[Research Contribution] How Did Social Distancing Policies Affect Vietnam’s Economy During COVID-19?
6 August, 2025
Keywords: COVID-19, Vietnam’s Economy, Social Distancing, Computable General Equilibrium Model, TERM
Nationwide lockdown or regional lockdown – which policy is more optimal from an economic analysis perspective in controlling the pandemic? A study by an author from the University of Economics Ho Chi Minh City (UEH) employs the TERM economic model to “decode” the differential impacts of social distancing strategies in Vietnam during the COVID-19 pandemic. The findings reveal that each policy choice not only alters the nation’s overall GDP but also generates varying effects on the expenditure components of GDP as well as on the sectoral contributions to GDP across regions – a consideration that policymakers must carefully weigh in future crises.
Research Context
In the context of the COVID-19 pandemic, policymakers frequently faced difficult choices that demanded trade-offs between the effectiveness of disease control and the maintenance of economic stability. A nationwide social distancing policy, while potentially enabling rapid containment of the pandemic, simultaneously carried the risk of inflicting greater economic damage compared to region-specific social distancing measures.
Vietnam experienced four waves of COVID-19, each accompanied by different response policies. Notably, Directive 16 on social distancing was flexibly applied from the national level (the first wave) down to provincial or local levels (subsequent waves). During the fourth wave, the scale and frequency of social distancing measures reached their peak, with numerous major provinces and cities in the southern region implementing comprehensive lockdowns.
This reality created an urgent need to evaluate the effectiveness and impact of distancing policies applied at different scales. Against this backdrop, the UEH author conducted a research project titled “Comparing the Impact of Nationwide Social Distancing and Partial Social Distancing Policies in Response to COVID-19 on Vietnam’s Economy: Application of the Computable General Equilibrium Model for Vietnam’s Regions,” aimed at providing quantitative evidence to support future policy decision-making, particularly in crisis situations with high spillover effects such as a pandemic.
The primary objective of the study was to compare the economic impacts of nationwide social distancing versus partial social distancing policies. The specific research questions included:
How do the expenditure components of GDP change across regions under different scenarios?
How do the contributions of economic sectors to GDP by region vary under the established scenarios?
Research Methodology
This study aimed to analyze and compare the economic impacts of two policy alternatives – nationwide social distancing and partial social distancing – through the Regional Computable General Equilibrium model (TERM) adapted to the Vietnamese context (TERM-VN). The TERM-VN model was developed based on the framework of the Centre of Policy Studies at Victoria University (Australia) and has been widely applied in analyzing economic shocks such as natural disasters and pandemics.
The study conducted five simulation scenarios involving a 10% decline in the Average Propensity to Consume (APC), occurring sequentially across: (1) the entire nation, (2) the Northern region, (3) the Central region, (4) the Southeastern region, and (5) the Mekong Delta region.
The economic indicators analyzed included: real GDP, expenditure components of GDP (consumption, investment, exports), the labor force, and the Consumer Price Index (CPI).
The Gragg numerical method (orders 2-4-6) was employed to ensure accuracy and stability in the TERM model’s computations.
Research Findings
The research findings demonstrate that the magnitude of the trade-off resulting from a shock in the decline of the Average Propensity to Consume (APC) at the national level was significantly greater than when the shock occurred in individual regions. This indicates that a nationwide social distancing policy applied uniformly across the country could exert more profoundly negative effects on the economy compared to localized distancing measures applied at the regional or provincial level.
Results from the model further revealed that the degree of impact from the same APC decline shock was uneven across regions. Regions whose production structures primarily served the domestic market suffered greater impacts than regions with strong export orientation. Correspondingly, the contributions of various sectors to GDP also fluctuated differently under the APC decline scenarios: export-oriented sectors generally maintained positive contributions, while other sectors experienced marked declines.
The study compared the magnitude of the consumption shock’s impact when occurring at the national scale versus the regional scale, which holds particular significance in the context of selecting response policies during the COVID-19 pandemic. In Vietnam, the progression of the pandemic can be divided into four phases: the first wave with nationwide distancing under Directive 16; the second wave with distancing in Da Nang; the third wave in several northern provinces; and the fourth wave, during which Ho Chi Minh City and numerous southern provinces implemented strict distancing measures, with Ho Chi Minh City alone having to impose distancing for a fifth time.
Results from the model showed that a nationwide APC decline shock caused sharper deterioration in key macroeconomic variables such as real GDP, consumption, investment, and labor (with the exception of exports) compared to localized APC decline scenarios. This reinforces the argument that nationwide distancing entails more severe economic consequences than selective, region-based distancing. While regional distancing primarily affects the local economy and partially impacts regions with close economic linkages, nationwide distancing triggers widespread negative spillover effects.
In addition to the simulation results, the study also compiled actual data reflecting economic fluctuations following each wave of the pandemic, particularly changes in income, employment, and expenditure after the 15-day nationwide lockdown starting from January 31, 2020. The study also compared the economic situation during the fourth wave (Q3 and Q4 of 2021) with the same period of the previous year (following the second wave), thereby reinforcing the validity of the TERM model in assessing the impacts of distancing policies.
Based on these findings, the study affirms that the application of the TERM model serves as a valuable tool for simulating and comparing economic scenarios when the same shock occurs at the regional versus national level. This supports policymakers in making more informed decisions, enabling them to weigh the extent of trade-offs before implementing response measures to similar economic shocks in the future.
Author: Dr. Nguyen Thi Hoang Oanh – University of Economics Ho Chi Minh City.
This article is part of the Series on Research Dissemination and Applied Knowledge from UEH, carrying the message “Research Contribution For All”. UEH cordially invites readers to follow the next edition of UEH Research Insights.
News and image: Author, Department of Communications and Partnerships, UEH
Chia sẻ:
[Research Contribution] Co-innovating for a Sustainable Ocean Economy
12 December, 2025
[Podcast] Recommendations for University education development
14 February, 2025
[Podcast] Developing Vung Tau into a World-Class Tourism City
16 January, 2025
[Podcast] Postdigital Design Strategies for Media Art
6 January, 2025
[Podcast] NFTs – Artistic Innovation or Just a New Hype?
27 December, 2024
[Podcast] Boosting Employee Creativity with Constructive Feedback
23 November, 2024
[Podcast] “Dutch Disease” in Remittances and the Case of Vietnam
4 November, 2024
[Podcast] Latest approaches for sustainable universities
11 July, 2024
Data Law – Part 1: Necessity for a New Approach
18 May, 2024
Advertising Evaluation on Tiktok Platform
14 May, 2024
[Podcast] Advertising Evaluation on Tiktok Platform
13 May, 2024
Promoting Learner Autonomy in English Language Learning (Part 1)
24 November, 2023
ArtTech And Sustainable Development
27 October, 2023
Motivation of EFL Vietnamese Students in Economics-related Majors
12 October, 2023
Climate Change And Our Society: The Urgency Of Gender Inequality
12 October, 2023
People Analytics in Vietnam
10 March, 2022
Revolution in Experimental Economics
30 January, 2022
The Sharing Economy: Governance Issues in Vietnam
24 January, 2022
Employment Policy For Ho Chi Minh City in Post-social distancing Period
28 December, 2021
Lifelong learning at UEH: Towards a Sustainable University
28 December, 2021
Building a Decentralized Stock Market based on Blockchain Technology
24 December, 2021
Consumer price index from big data mining perspective (Big data)
17 November, 2021
Overview Of Digital Currency – Part 5: DIEM Private Stabilized Currency
11 November, 2021
