|Ho Chi Minh City, the southern economic hub of Vietnam (Photo: VNA)
“Still, Vietnam may get out of the pandemic in better shape than others. Despite the expected growth rate decreasing to 4.9% in 2020, it is among the few economies in the Asia Pacific - and perhaps in the world - that still have positive growth rates,” said Nguyen Khac Giang, a senior research fellow at the Vietnam Institute for Economic and Policy Research (VEPR) under the University of Economics and Business – the Vietnam National University, and a PhD candidate at the Victoria University of Wellington.
“The Asian Development Bank (ADB), while predicting the country’s sharp decrease in GDP growth, said that the Vietnamese economy remains ‘uniquely robust’ in the sub-region. Sharply decreased oil prices - despite a greater burden on Vietnam’s strained budget - give Vietnamese policymakers room for monetary and fiscal stimulus as inflation concerns fade away,” he said.
Giang added that Vietnam’s success in curbing the pandemic might attract foreign investors, as will its traditional advantages of cheap labour, political stability, and proximity to China. Social distancing is also helping accelerate the country’s transformation to a digital economy, which is considered by the government as a pillar of sustainable growth.
Adam McCarty, Chief Economist of Mekong Economics in Hanoi, also held that when the Vietnamese government declares an end to local coronavirus spread, the domestic economy is likely to bounce back as far as it can without foreign tourists.
“The domestic economy could revive and all the masks could come off, so that would be a big stimulus and that could happen in less than a month from now,” he said.
According to the website www.voanews.com, Vietnamese officials are preparing for a limited economic revival as their coronavirus caseload stays low.
The government is rolling out incentives now to revive companies including export manufacturers, a backbone of the economy. Factories are still operating on local labor, and export growth from January 1 through March 15 grew 6.8% over the same period of 2019, it noted.
German enterprises were also optimistic about the medium-term recovery of the Vietnamese economy, according to the AHK World Business Outlook 2020 released recently by the German Chambers of Commerce and Industry (DIHK).
Although German firms expressed concerns about the negative impact of the COVID-19 pandemic on their business with 82% of investors forced to lower revenue growth targets in the 2020 fiscal year, they expected recovery to come in the medium term.
Up to 72% of the respondents to the survey on which the report was based said they would continue to invest in Vietnam while 27% plan to recruit more workers.