|A cable factory of Truong Phu Company in Hai Duong Province (Photo: Reuters)
“The country will not be immune to the slowdown of external global demand. But we don’t expect the nation to fall into a recession or suffer a contraction,” said Sian Fenner, the lead Asia economist at Oxford Economics.
Fenner attributed Vietnamese success to putting in place early border restrictions and social distancing measures which have so far served to help the country avoid a large wave of infections.
Moreover, the nation has also benefited from disruption taking place in supply chains due to the impact of the US-China trade war. Indeed, it is thought that this ongoing dispute between the two global powers will serve to benefit the country and support the local economy, Fenner noted.
This series of comments to CNBC came after the capital started to allow firms to resume operations beginning from late April.
As a result of the easing of measures, May 4 saw millions of students return to school after spending three months at home, with the nation being one of the first in Southeast Asia to ease restrictions relating to the movement of citizens following all schools closing in early February after the initial detection of local cases.
Despite sharing a long land border with China where the COVID-19 first emerged from, there has so far only been 271 positive COVID-19 cases reported in the nation, with no deaths among a population that is just under 100 million. Moreover, there has been no reports of any new local cases for almost three weeks.
The country’s success has caught the eye of many commentators abroad, with the decisive measures taken early on in the outbreak earning vast praise.
In addition, many pundits believe that the way in which the nation has dealt with the outbreak shows how much has been learnt from its experiences with SARS in 2003.
Back then, Vietnam became the first country to be removed from the list of places suffering from local transmissions, according to the World Health Organization.
Gareth Leather, senior Asia economist at Capital Economics, pointed out that easing restrictions will not prevent the economy from contracting sharply later in the year, with life unlikely to immediately return to pre-crisis levels.
Leather believes that the main reason the nation’s growth will remain weak is due to the deteriorating outlook globally.
″Vietnam is one of the most trade-dependent economies regionally, with exports equivalent to over 70% of GDP, therefore it will be hit harder than most,” Leather outlined.
Exports fell annually by 12.1% in March with the worst probably yet to come, he added. Elsewhere, the tourism sector, which generates a total of 4% of GDP, will also struggle, he noted.
Leather predicts that the nation will post 0.5% GDP later this year, far lower than the 7.0% seen in 2019. Furthermore, the International Monetary Fund is expecting Vietnamese GDP growth to stand at 2.7% for the year.