A recent article published by Nikkei Asian Review states that, “Vietnam is shaping up as Southeast Asia's single economic success story in the novel coronavirus (COVID-19) era”.

An ultra-large container ship operated by Maersk docks
at Cai Mep port in southern Vietnam.

This comes as the country has successfully maintained consistent positive growth, just as other regional economies struggle to recover.

Nikkei notes how Vietnamese real gross domestic product expanded by 2.6% on-year in the third quarter, marking a second consecutive quarter of growth amid the COVID-19 pandemic.

According to the Japanese financial publication, the International Monetary Fund (IMF) anticipates that Vietnam will rise to fourth in nominal GDP in ASEAN this year, surpassing Singapore and Malaysia and rapidly gaining on the Philippines.

“In contrast to other ASEAN economies, Vietnam has succeeded in keeping the virus under control. Rising exports have also helped to drive growth, as companies relocate production from China”, says the article.

Most notably, annual exports recorded growth of 9.9% in October to US$26.7 billion, with the Ministry of Industry and Trade projecting a rise of 3% to 4% throughout the year.

Nikkei indicates that while large vessels usually opt for other ports in the region, such as Singapore, Vietnam’s growing exports have boosted shipping demand enough to make it a worthwhile location for ships bound for Western countries. For example, late October saw an ultra-large container ship operated by Maersk dock at Cai Mep, the first time this has happened to southern Vietnam's largest port.

“This allows for more direct transportation of Vietnamese goods to buyers, which lowers shipping costs, shortens transit time, and makes the country more competitive as an exporter”, the article notes.

According to Nikkei, trade friction between the United States and China has served to boost Vietnamese trade, largely due to manufacturers relocating their factories away from China in an effort to avoid American tariffs.

“Both multinational corporations and Chinese businesses have moved production to Vietnam to take advantage of its skilled, low-cost labour. Samsung Electronics, which has manufactured smartphones in the country for over a decade, is also looking to move personal computer production there as it shuts down a plant in China”, according to Nikkei’s article.

Furthermore, the economic impact of the COVID-19 outbreak has been kept to a minimum as the country swiftly imposed a mass lockdown for only three weeks in April, with normal manufacturing activity resuming faster than it did elsewhere in the region.

“Job losses were limited, and consumer spending, which accounts for 70% of GDP, has remained solid”, the article adds.

In contrast, other ASEAN countries have yet to emerge from slumps caused by the virus.

“The IMF's full-year GDP forecast shows a 1.6% rise in Vietnam, but drops of 6% in Singapore and Malaysia, and a 7.1% slump in Thailand”.