Despite COVID-19 challenges, Vietnam is one of the brightest spots in Asia and its economy is likely to rebound soon, Edward Teather, ASEAN economist at UBS Research told CNBC recently.

The EVFTA presents both opportunities and challenges for the garment sector  

In its “Squawk Box Asia” show, Edward Teather noted Vietnam has begun to bear the brunt of the pandemic, but “the outlook is looking one of the brightest in the region.”

“Retail sales, imports (and) industrial production were all actually up on the year in the month of June, which is better than you can say for most economies in the region,” he analysed.

According to the economist, while many economies contracted in the second quarter of 2020 compared to the same period last year, Vietnam’s gross domestic product grew slightly at an estimated 0.36%.

To support his argument, Teather pointed out Vietnam had succeeded in containing the first coronavirus outbreak though it shared a border with China, where the virus outbreak was first reported.

In addition, the enforcement of the European Union – Vietnam Free Trade Agreement (EVFTA) is expected to boost inflows of foreign direct investment into Vietnam.

The ongoing COVID-19 pandemic has caused foreign direct investment levels to grind to a halt, but Teather believed there is “plenty of activity” in the pipeline, and those investments could pick up in 2021 as border restrictions are eased.

Another advantage for Vietnam is that it is emerging as an alternative manufacturing hub for companies that want to shift production out of China due to tensions between Beijing and Washington that have resulted in rising tariffs.

The expert also said the Government’s incentive policies would also help boost the economy, and the central bank signaled to get credit growth up over 10%.

“Vietnam is growing and is well-positioned to continue to take global market share in terms of exports going forward, so pretty bright prospects in a relative sense in the region,” Teather concluded.