Many Thought Asia’s Top-Performing Economy In 2020 Is China – But The Top Winner Is Vietnam

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Jan 28 2021
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China, despite a trade war with the economic superpower United States and a pandemic war with Covid-19, has been expected to register a positive economic growth in 2020. Every single analyst, economist, think tank or financial institution knew that despite being the first country hit by Coronavirus, the Chinese economy would grow by at least by 2% in 2020.


Recently, UK-based Centre for Economics and Business Research (CEBR) released a report, announcing that China will overtake the United States to become the world’s biggest economy by 2028. In addition to a 2% GDP (gross domestic product) growth in 2020, the British think-tank said the Chinese economy is expected to grow by an annual 5.7% between 2021 and 2025.


From 2026 to 2030, CEBR thinks China’s growth is projected to be 4.5% annually, before slowing to 3.9% the following 5 years. However, after China recorded a trade surplus of US$535 billion for the full year of 2020 – a stunning 27% increase from 2019 and the highest since 2015, other economists say the Chinese’s GDP will expand 8.2% this year (2021).

Vietnam Economy - Port of Vietnam

In contrast, the U.S. is estimated to have contracted by 5% in 2020. This year (2021), the American economy would grow by 1.6% due to a “strong post-pandemic rebound”. China’s success in controlling Covid-19, while other economic powerhouses like the U.S. and European Union struggle to contain the pandemic, allows it to increase its share of global trade and investment.


While not every Asian economy has reported fourth-quarter and full-year economic numbers, China’s final quarter of last year saw a growth of 6.5%, beating expectations. Essentially, the country’s economy grew 2.3% in 2020 as a whole. But China isn’t the only country in Asia that has done a sterling job in containing the pandemic, a critical factor in growing the economy.


One country that could emerge a champion not only in the Southeast Asia, but also is likely the top-performing economy in Asia in 2020 is none other than Vietnam. Priyanka Kishore, head of India and South East Asia for Oxford Economics, said – “Along with China, Vietnam is the only major Asian economy expected to register positive growth in 2020,”

Vietnam Economy - Port of Vietnam

Based on data from the Vietnamese government and estimates from the IMF (International Monetary Fund), Vietnam economy grew 2.9% last year – obviously better than China’s 2.3% growth. Unlike its neighbours in the region, Vietnam, which has effectively closed its borders, has reported only 1,553 infections and 35 deaths.


The country’s first wave of infections happened in April 2020, but was quickly contained and crushed. It would go nearly 100 days without local transmission until the “Danang outbreak”. Swift lockdown, strict quarantine, massive testing and tracing measures have proven to be the correct formula in keeping the virus in check, making Vietnam a model for other countries to follow.


Like China, Vietnam’s manufacturing sector was widely credited for the economy’s outperformance last year. In the third quarter (July-September) 2020 alone, its GDP rose 2.62% year-over-year and exports jumped 11% to US$80 billion, thanks largely to a 20% increase in exports of personal computers to meet a growing demand as students worldwide attend online classes.

Coronavirus - Vietnam Contained The Pandemic

However, the tourism industry, which accounted for around 8% of Vietnam’s GDP, has clearly dented the country’s economic recovery. Foreign tourists stopped entering the country in March, but the loss of foreign tourism is worse for countries like nearby Thailand, where tourism accounts for 14% of GDP. Of course, Vietnam has something that Thailand does not – a manufacturing hub.


The US-China trade war has seen Vietnam emerged as the largest beneficiary, gaining as much as 7.9% of its GDP in mid-2019. Fitch Solutions said in December – “Considering that Vietnam has been a major beneficiary of the supply chain relocation or diversification trend out of China over the past several years, we see large scope for growth in Vietnamese exports in the years to come.”


As a bonus, not only Western multinational corporations have moved production to Vietnam, but also Chinese businesses. At the centre of its attraction is Vietnam’s large pool of skilled and low-cost labour. Global technology leaders like Apple and Samsung have already started operating in Vietnam. The country’s exports to the U.S. have jumped by 23% in the first three quarters in 2020.

Vietnam Manufacturing - Factories

The growing exports have naturally boosted shipping demand, so much so that it was worthwhile for ships bound for Western countries to skip Singapore and stop at Vietnam port instead. The lower shipping cost and shorter transit time makes the country extremely competitive, giving the traditional preferred ports like Singapore a run for its money.


In fact, as early as October 2020, according to the IMF forecasts, Vietnam’s economy will rank 4th in Southeast Asia in 2020, surpassing Singapore and Malaysia – just behind Indonesia, Thailand and the Philippines. As services sector, including tourism, slowly pick up, some economists think even a 10% growth for Vietnam in 2021 is absolutely possible.


Vietnam’s strong economy has attracted the attention of Bank of America, where its economists now predict the country’s economy will grow 9.3% in 2021 – higher than China’s economy for the same year and a much higher growth rate than the 6.7% expansion projected by the World Bank. Unless the U.S. imposes an economic sanction due to the “currency manipulator” label slapped by Trump, this country appears unstoppable.

Coronavirus - Vietnam Covid-19 Economy


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