Vietnam has minimised the economic damage from Covid-19 and is the only country in Southeast Asia on track for growth this year. Its economy is expected to grow 2.4% according to the latest figures from the International Monetary Fund (IMF).
The IMF credited “decisive steps to contain the health and economic fallout from Covid-19” for the country’s success. It is predicting a strong economic recovery in 2021, with growth projected to strengthen to 6.5% “as normalisation of domestic and foreign economic activity continues”.
Although Vietnam lacks the health infrastructure of many wealthier countries, it has been widely praised for its public health measures, which quickly brought Covid-19 numbers under control. It was quick to develop testing kits, and used a combination of strategic testing and aggressive contact tracing to help control numbers.
The country’s once-thriving tourism sector has taken a particularly bad hit, but it has so far avoided the worst economic effects of the pandemic.
Michael Kokalari, chief economist for Vinacapital, a Vietnam-focused investment company, told the BBC, “People are buying new laptop computers or new office furniture, for both working and spending more time at home. Well, a lot of those products are made in Vietnam.”
The pandemic has also prompted more companies to consider manufacturing in Vietnam because of the need to diversify their supply chains. “Companies thought they had a global supply chain, but when Covid arrived they found out they only had a China supply chain and they couldn’t produce,” said Kokalari.
The ongoing US-China trade war has also made China a less attractive place to manufacture, with a number of tariffs in place on exports. Vietnam’s exports to the US have increased by 23% in the first three quarters compared to the same period in 2019, with electronics exports up 26%.
Many multinationals have started operating in Vietnam, including global technology leaders like Apple and Samsung. Apple now has plans to manufacture its high-end Airpods studio earphone in Vietnam.
Since the start of the pandemic, Vietnam has had only 1,288 Covid-19 cases and 35 deaths.