Vietnam tipped to be most resilient regional economy amid virus crisis

Residents wearing face masks in Hanoi on May 18, 2020.
MAY 18, 2020 - 5:39 PM

VIETNAM could emerge from the coronavirus crisis with the strongest growth in South-east Asia, but the downside risks are also high, Dutch financial group Rabobank has warned.

The Vietnamese economy is still tipped to stay in positive territory in 2020 with a 1 per cent expansion, despite the sharp slowdown from the 7 per cent growth clocked in 2019.

“Vietnam might (be) able to benefit from further rising tensions between the US and China as it has low wages and an export basket comparable to China,” economists Raphie Hayat and Ralph van Mechelen wrote in a report on May 18.

To be sure, exports from trade-reliant Vietnam and Singapore are likely to take a heavy hit from the pandemic, while Vietnam’s strict containment measures will also dampen domestic demand.

The report also warned that United States leader Donald Trump might impose trade tariffs on Vietnam in response to a jump in Vietnam’s trade surplus with the US, while a resurgence of the virus in the healthcare system could sour the economic outlook as well.

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“However, for now, we think Vietnam and Indonesia might still see modest growth this year,” the economists said - a far cry from the “sharp contraction” forecast for other countries in the region.