The South East Asian country saw a rapid increase in its economy during the COVID-19 lockdown which affected the economy of many countries around the world. Vietnam’s economy is expected to grow 2.4% this year based on the predictions of the International Monetary Fund.
According to their reports, the IMF credited the decisive steps the country took in order to contain the spread of the deadly virus while also helping the economy scale through the devastating effects of the pandemic.
As of now, there are officially 1,288 reported COVID-19 cases with only 35 fatal cases in the country which is one of the lowest in the world. The IMF also predicted that the country will have a stronger economy come 2021 while the annual growth is projected to reach about 6.5% “as normalization of domestic and foreign economic activity continues.”
Compared to other developed countries such as the United States or Britain and other wealthier countries doesn’t have the “Powerful” health infrastructure if there was ever a big number of cases which could have easily overwhelmed the country’s health sector.
But it’s handling of the pandemic earned the country a lot of praise from other foreign governments which made the cases much easier for them to combat with ease.
It was quick to develop testing its as well as using a number of different strategies with aggressive contact tracing systems to help control the number of cases.
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.
There were reports of different countries moving their manufacturing away from China and directly to Vietnam all which will in turn help the country’s economy grow more. According to Michael Kokalari who is the chief economist for Vinacapital, a Vietnam-focused investment company stated that there were some factors that cushioned the blow.
Perhaps the most unexpected windfall has come from the huge increase in the number of people working from home globally.
“People have bought a new laptop computer or they’ve bought new office furniture, for both working and spending more time at home. Well, a lot of those products are made in Vietnam,” he told the BBC.
The country’s exportation capability to the United States had drastically increased by 23% in the first three quarters unlike this same period back in the year 2019. Electronics exports has also gone up to a whooping 26% basically due to a number of companies moving their manufacturing away from China.
Vietnam’s manufacturing sector has grown enormously over the past decade because businesses have started to look elsewhere as labour costs in China increased.
Another situation which played to Vietnam’s advantage is the ongoing US-China trade war which is making China less attractive to manufacturers as tariffs have gone up exponentially.
Many multinationals have started operating in Vietnam, including global technology leaders like Apple and Samsung. Apple in fact have plans to make its forthcoming Apple Studio headphones completely in Vietnam.
The pandemic has also prompted more companies to consider manufacturing there, because of the need to diversify their supply chains, said Mr Kokalari.
“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 catalysing problem,” he added. With the country’s economy growing, this will definitely have an outcome on the country’s economy directly or indirectly.