Although Vietnam suffers from weak healthcare infrastructure, the government’s rapid response to the outbreak minimized damage to the economy.
Vietnam is set to end 2020 as one of the world’s fastest-growing economies, according to the International Monetary Fund, and one of the few economies in Southeast Asia to exhibit any growth at all. The IMF expects Vietnam’s economy to grow 2.4% this year as a result of Hanoi’s deft handling of the Covid-19 outbreak. Yet some analysts say Vietnam’s economic resilience is due in part to factors outside the purview of policymakers, such as changes in global supply chains and geopolitical headwinds.
Era Dabla-Norris, mission chief to Vietnam and division chief in the IMF’s Asia and Pacific department, said in a statement that Vietnam’s growth is expected to continue next year: “A strong recovery is expected in 2021. Growth is projected to strengthen further to 6.5% as normalization of domestic and foreign economic activity continues.”
Although Vietnam suffers from weak healthcare infrastructure, the government’s rapid response to the outbreak minimized damage to the economy. Its lockdown was short-lived, and despite a small outbreak in July and August, daily life has largely returned to normal. “This kept infections low and prevented a sharp contraction in domestic economic activity. Successful containment allowed export-orientated sectors to continue operating,” Khoon Goh, head of Asia research at ANZ Research, said in an e-mail. ANZ forecasts growth to reach 7.7% next year.
Escalating trade tensions between the US and China helped propel Vietnam’s growth, as well. In the first eight months of 2020, exports from Vietnam to the US grew 20% year-over-year, accord-ing to London-based consultancy Capital Economics, as importers shifted from China to alternative suppliers to avoid tariffs imposed by the Trump administration. Exports reached record levels in August, with strong demand for electronics. Capital Economics predicts Vietnam will be the world’s fastest-growing economy this year.