Published on 12/16/2020 at 8:30 am
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Vietnam is doing better than resisting the Covid-19 crisis. With growth expected to reach 2.4% in 2020 – one of the highest in the world – our former colony is in insolent economic health, which contrasts with the turbulence that many great powers still have to face. A strong response to the pandemic, sharply increasing exports and healthy public finances, this is the cocktail that has allowed Vietnam to keep its head above water. Because many sectors, such as tourism and aviation, have suffered and despite its success, the country will be far from the growth rate expected before the crisis, 6.8%.
With less than 1,500 cases and 35 deaths, the Covid-19 epidemic has largely been kept under control thanks to a strong and rapid response. Very quickly, the Vietnamese were subjected to mass quarantines, a very effective tracing system was put in place and movement extremely controlled. “The lockdown of the country lasted less than three months, so domestic activity quickly returned to normal as early as June,” Nguyen Xuan Thanh, professor of public policy at Fulbright University, told AFP.
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Exports also drove growth. An economy heavily dependent on foreign markets, Vietnam had a lot to lose as demand for clothing and smartphones collapsed in some of its biggest customers, such as the European Union and Japan. “But it turned out that exports continued to promote growth this year,” Thanh explains. “This is because Vietnam has diversified its exports. It does not depend on a single market.” According to Vietnamese customs, exports to China increased by 15% in the first nine months of 2020, and to the United States by 23% to reach $ 54.7 billion.
Several sectors benefited from this, such as electronics (+ 26%) or the furniture industry (+ 12%), driven by the strong demand for equipment in televisions, computers or office furniture, due to containments decided in many countries. The country is also in the process of doing well in the trade war between the United States and China, many industrialists having decided to source from Vietnam rather than China in order to avoid trade rights. customs.
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Less rosy is the situation of the tourism sector, affected as everywhere in Asia by the disappearance of foreign tourists. In Hue, a former imperial city and tourist hotspot, 8,000 employees have lost their jobs and 80% of hotels have closed, according to the tourism department of Thua Thien Hue province. Ditto in Hanoi, the capital, where “tourism is dead”, notes Nguyen Dinh Toi, a hotel manager in Hanoi and in Ha Long Bay. “We survived the SARS (Severe Acute Respiratory Syndrome) epidemic, the 2009-2010 financial storm … but the current situation is unimaginable,” he says.
Still, the Vietnamese economy is less exposed than other countries in the region, such as Thailand, where the IMF predicts the economy will collapse by 7.1% this year. The Vietnamese government has also helped cushion the blow by injecting money into infrastructure projects such as roads and bridges, says Nguyen Xuan Thanh. “It created additional demand, offsetting the Covid and the drop in consumption, and it also created jobs,” he says. Public investment in the first eleven months of 2020 increased 34% year-over-year, the highest increase since 2011, according to government figures.
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Vietnam’s relative triumph this year could turn into a longer-term advantage, said Adam McCarty, chief economist at Mekong Economics. Some Japanese companies and the American giant Apple are already planning to transfer part of their production to this Southeast Asian country. The way the coronavirus has been treated has “almost made Vietnam famous around the world,” notes Adam McCarty, adding that this should prompt major global groups to take a different view of Vietnam.
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