Vietnam’s Economy Shines During The COVID-19 Pandemic Throughout Asian Markets
The only Asian country growing during the pandemic is Vietnam with a steady 2.4% growth rate.
The only Asian country growing during the pandemic is Vietnam, with its positive annual growth as opposed to most countries’ negative one as COVID-19 rages through the borders once more.
The country’s economy is expected to expand by 2.4% for 2020, as shown in the reports of international monetary fund (IMF).
According to the IMF, the credit goes to the decisive steps taken during the pandemic in terms of health and economic sustenance throughout the year. The country thus showed positive growth and is expected to have an expansion economically.
The country which is densely populated has had miraculously only 1288 cases of the disease and only 35 of them have lost their lives due to it. There are no significant economic or health crises due to COVID-19 in the country.
The IMF predicted that Vietnam would recover well from the pandemic and its economic effects in the year 2021. It is expected that the country would grow by 6.5% as life gets back to normal in a few months. As the domestic economic activity and foreign come back to its standard form.
Vietnam is said to have benefited from the prudent fiscal policies which were primarily focused towards providing support for vulnerable households.
Era Dabla Norris, Vietnam’s Mission Chief and Division Chief in IMF’s department of Asia and Pacific region said that the monetary policies easing up and the financial relief which was provided by the State Bank of Vietnam has alleviated the pressures of liquidation and lowered the funding cost while facilitating the continuous flow of credit.
The inflation is expected to be contained at 4% while the expected GDP growth rises to 6.5%.
She also suggested that the medium and long term emphasis should remain on mobilizing the revenues for the infrastructure projects. They should also focus on strengthening the social protection systems while safeguarding the debt sustainability.
“Monetary policy should remain supportive in the near term. Greater two-way exchange rate flexibility within the current framework would reduce the need to build reserve buffers and facilitate the adjustment to a potentially more challenging external environment.” She said.
The number of factors which cushioned the economic blow during pandemic includes the wide acceptance of the notion of work from home for many of the citizens, according to Micheal Kokalari, Vinacapital’s chief economist, an investment company focused in Vietnam.
He told a news channel that the people had prepared themselves by buying new computers and laptops to keep busy and work from home during these times. These products are also made in Vietnam, which helped the economy and kept the citizens alive and working.
The electronics made in Vietnam have seen an increased rate of export, especially to the US during the pandemic as compared to the levels of 2019.
Imposed Tariffs on the Country
As the Chinese labour costs increased, the businesses all over the world have started looking elsewhere for the labours. Vietnam has filled this gap, and as a result, its manufacturing sector has grown tremendously.
Due to bad blood between the economic giants like the US and China, the latter has not continued to stay in the country of choice when countries look for a place to assemble their products. The tariffs imposed due to the US-China trade war has caused much distress on both sides.
Vietnam has taken China’s place in Asia as companies like Apple has sought to establish a high-end Airpods studio in the country.
With increased numbers of COVID-19 cases and repeated bouts of lockdowns all over Asia, companies have been on the lookout for other manufacturing sides and diversifying their supply chain. Mr. Kokatari also thinks that it will affect countries like Vietnam positively in terms of economic growth.
“When Covid comes, you thought you had a global supply chain, and you find out that you only have a China supply chain and you can’t produce.Well, that’s a much more urgent, emotionally catalyzing problem,” he added.
As of September 2020, the country attracted $21.20 billion. The rate is 81.1% higher than last year’s investments around the same time.
By September 2020, the foreign investments and projects had already disbursed over $13.76 billion, which is a massive growth of 96.5% over last year’s around the same time.