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A corner of Ho Chi Minh City (Photo: VNA)

Southeast Asia's six leading economies are expected to face diverging fiscal paths in 2021, with Vietnam, Indonesia, and Malaysia gaining from pre-pandemic levels while Singapore, the Philippines, and Thailand struggle to return to health.

Nikkei compiled the International Monetary Fund's country-based projections for real gross domestic product, setting the 2019 figures as a baseline of 100. Vietnam, Indonesia, and Malaysia all scored above the 100 marks for 2021, meaning their economies are seen expanding next year compared with the level before the coronavirus outbreak in 2019. Still, all six countries face continued uncertainties from the epidemic, as well as the new incoming administration in the U.S.

Vietnam is forecast to lead the group with a projected growth index of 108.4. S&P Global predicts the Vietnamese economy will expand 10.9% in real terms in 2021, more than any other country in the Asia-Pacific, following a 2.91% uptick this year.

Vietnam was also the only one of the six to log real economic growth in 2020, thanks to its quick success in curbing the coronavirus pandemic. Its leadership also bolstered effective demand through public projects ahead of the Communist Party Congress that begins there in January, said Nikkei.

"Many global companies are flocking to Vietnam, which is a boon to its exports," said Yuta Tsukada at the Japan Research Institute. Given the low production costs in the country, Tsukada sees more companies shifting operations there from China, should the trade war between Washington and Beijing continue.

A bedding factory in Hanoi: Vietnam has succeeded in curbing both the health and economic impact of COVID-19. (Photo: Reuters)

In its World Economic League Table 2021 released recently, CEBR said that Vietnam’s annual rate of GDP growth is forecast to pick up to an average of 7 percent between 2021 and 2025. Over the subsequent ten years, CEBR forecasts that the Vietnamese economy will expand by 6.6 percent on average each year. The next 15 years are set to see Vietnam climb rapidly up the rankings of the World Economic League Table and its position will move from 37th in 2020 to 19th in 2035.

However, Nikkei commented that Vietnam and other Southeast Asian countries could be impacted by global developments regarding the coronavirus as well as U.S. policies under President-elect Joe Biden after he takes office on Jan. 20. Though COVID-19 vaccines are starting to become available in certain areas, they may not become widespread in emerging economies like those in Southeast Asia for a long time. Their effectiveness against new strains discovered in the U.K. and elsewhere has yet to be proven as well. Biden's Democratic power base also leans toward protectionist policies and is reluctant to rejoin the Trans-Pacific Partnership trade pact that sitting President Donald Trump exited.

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