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German newspaper DW recently published an article evaluating Vietnam’s economic prospects after the COVID-19.
The article wrote, despite global economic crisis and likely recession in some of its neighboring countries, Vietnam aims for an economic growth of 5% this year. The ambitious goal was announced by Prime Minister Nguyen Xuan Phuc during an online conference with thousands of foreign and local business representatives.
The ambitious goal is significantly higher than the prediction of the International Monetary Fund (IMF), which announced that Vietnam's gross domestic product (GDP) is expected to grow 2.7%. Even that prediction puts Vietnam ahead of its neighbors and ensures that the country will continue to be Southeast Asia's fastest growing economy.
The Vietnamese government expects the economy to benefit from the nation's thus far successful fight against the novel coronavirus. Until now, Vietnam has recorded 324 COVID-19 infections and zero related deaths.
The country hasn't seen new community infections in weeks. All recent infections have been imported cases of Vietnamese who were repatriated from countries that suffer from much severe outbreaks of the virus.
Experts believe that Vietnam was able to contain the virus thanks to its quick and drastic solutions such as closing schools, shutting down borders and suspending international travel. The country also set up quarantine camps, where tens of thousands of travelers arriving from overseas were quarantined for 14 days.
'Ambitious but not unrealistic'
DW cited Adam McCarty, the chief economist of research and consultancy firm Mekong Economics saying that:
"Maybe this is a turning point where Vietnam leaves the group of countries as Cambodia and the Philippines and joins more sophisticated countries as Thailand and South Korea, even though Vietnam doesn't have a similar GDP yet," McCarty told DW from Hanoi.
The economist said that Vietnam has shown the world that it can manage a complex threat as the coronavirus health crisis. "They're showing that they can handle it much better than most European countries and the US. That's a signal to foreign investors and to foreign governments."
Vietnam hopes to continue the trend that started a few years ago. After trade tensions between the US and China began to rise, some companies moved their production from China to Vietnam. With comparatively cheap labor, a young population and a relatively open investment climate, the Southeast Asian country is often seen as a good alternative for mass production in China.
Vu Minh Khuong, associate professor at the National University of Singapore, said that the Vietnamese government's goal is "ambitious but not unrealistic." Khuong told DW that he expects more foreign investments and more reallocation from China. Furthermore, COVID-19 has strengthened Vietnam's social capabilities and given a boost to digitalization, he said. "Thanks to the pandemic, Vietnam has made leapfrogging progress in digital transformation. The rate of online transactions in public services increased from 12% to 24% during the two-month lockdown."
Khuong also said that he expects strong government investment and private consumption to boost the economy.
Although Vietnam is expected to recover faster than its regional rivals, the country cannot avoid being affected by the COVID-19 crisis. In the first quarter of this year, Vietnam's GDP increased by 3.8% over the same period last year, the lowest figure in 11 years.
Sectors like tourism and export-related industries are having a particularly hard time. Vietnam has closed borders to foreign tourists since middle March in a bid to prevent the spread of the coronavirus. Garment factories have seen a sharp decline in orders because of a plummeting demand for clothes and shoes.
"With the rest of the world still suffering from COVID-19, exports are really going to get hurt," McCarty said.
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