By now, everyone has head the same old story. Covid-19 has caused unprecedented economic damage to the entire world, supply chains have been disrupted, nations are experiencing poor growth, et cetera. However, amidst the turmoil, there is a shining star that serves as excellent example. This star is Vietnam, a nation which has managed to minimise the economic consequences of the pandemic and is likely to show growth come 2021.
According to figures from the International Monetary Fund (IMF), Vietnam’s economy is expected to grow 2.4 percent this year. The IMF credited “decisive steps to contain the health and economic fallout from Covid-19” for the country’s success. Overall, Vietnam has only had approximately 1,288 confirmed cases of Covid-19 so far, and only 35 deaths related to the coronavirus; a far cry compared to its neighbours and the rest of the world.
The IMF predicts that if Vietnam is able to keep up this trend, then the country will likely experience a very strong economic recovery in 2021, with growth projected to strengthen to 6.5 percent as normalisation of domestic and foreign economic activity continues.
Although Vietnam lacks the health infrastructure of many wealthier countries, it has been widely praised for its public health measures, which quickly brought numbers under control. In addition to this, Vietnam was quick to develop testing kits, and this in combination of aggressive contact tracing, helped to control numbers.
The country has seen slower growth this year and its once-thriving tourism sector has taken a particularly bad hit, but it has avoided the worst economic effects of the pandemic.
Michael Kokalari, chief economist for Vinacapital, a Vietnam-focused investment company, also believes that several key factors worked to help cushion the blow. Chief among these being the huge increase in the number of people working from home globally. This, along with the massive boom in Vietnam’s manufacturing sector over the past few years, have led the country’s exports to US to increase by 23 percent in the first three quarters of 2020, compared to the same period in 2019.
Said manufacturing sector experienced exponential growth as many businesses began an exodus from China due to rising costs. The on-going US-China trade war served to aggravate the issue further, leading to even more companies entering Vietnam.
The pandemic has also prompted more companies to consider manufacturing there, because of the need to diversify their supply chains, said Mr Kokalari.