Vietnam is the new Asian locomotive

Vietnam is the new Asian locomotive

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Despite Covid-19, Vietnam's economy thrives and records the best economic growth of 2020 in Asia

Vietnam confirms itself as the Asian economy with the best performance of 2020, as well as one of the few to have been only marginally affected by the economic crisis. Thanks to the successful fight against the Covid-19 pandemic, the Asian country was one of the very few nations in the world to register GDP growth in the past year, thus ensuring, in 2021, an advantage over regional and global competitors.

The health emergency has drained the economies of much of the world, nonetheless Vietnam has successfully managed to contain the spread of infections, with a total of slightly over 1,800 cases and just 35 deaths to date. Much lower numbers than what we are used to, especially considering Vietnam has a population of almost 98 million people. Building on previous epidemiological experiences, such as the 2003 SARS, the Vietnamese government was able to quickly implement a detailed emergency plan, weeks before other nations considered taking any measure. The borders with China were rapidly closed and, in addition to the restrictions on international transits, the government ordered rigorous monitoring of the infections, starting a scrupulous tracing of the spread of the virus. All these efforts have largely paid off and have allowed the country to record an economic growth of + 2.9% compared to 2019, which is even higher than the Chinese growth rate in the same period. The timely response to the pandemic has also helped to attract a large share of foreign direct investment and to increase the import-export sectors.

In the latter area, the expansion of the Vietnamese economy is largely driven by the numerous trade agreements concluded in 2020. The free trade agreement signed with the European Union, which entered into force in June last year, was followed by the Regional Comprehensive Economic Partnership (RCEP), which created the largest trading block in the world with 15 Asian economies. Furthermore, due to Brexit, the Asian country has signed a new free trade agreement with the United Kingdom, replacing the one previously ratified with the EU. Finally, Vietnam has signed bilateral agreements with Japan and South Korea and joined the Comprehensive and Progressive Agreement for Trans-Pacific Partnership together with other Pacific nations.

Even the services sector, which was most affected by the pandemic, managed to recover in the last quarter of 2020 and, despite a natural contraction in tourism for 2021, analysts calculated a drop in GDP only of 1, 5% lower than the potential if the health emergency had not occurred. 

Despite the unfavorable circumstances, therefore, a rather bright future seems to be looming for Vietnam. The British consultancy Center for Economics and Business Research (Cebr) has in fact estimated an exponential growth for the Asian state, which would establish itself as the 19th world economy by 2035. With a potential increase in GDP of 7.7% in the next 10 years and of 6.6% in the following years, Vietnam should be able to easily overtake other regional powers.

These development goals were highlighted during the 13th Congress of the Communist Party, which ended on Sunday 31 January with the re-election for the third term of Nguyen Phu Trong as General Secretary of the Party. The Congress defined Vietnam's economic-political trajectory for the next five years, pushing for the improvement of the country in terms of scientific and technological development.

Reasonably, the economic growth will go hand in hand with the achievements on the international stage. In this context too, 2020 was a positive year for Vietnam; it gained greater visibility in foreign relations by holding the Presidency of ASEAN and it was selected as a non-permanent member of the United Nations Security Council for the two-year period 2020-2021, successfully carrying out all international duties. With regard to the Presidency, Vietnam has promoted the reactivity of the Association, limiting the damage of the pandemic and ensuring, at the same time, the elaboration of the agenda set for 2020. But, among the greatest successes that Hanoi can boast, there it is undoubtedly the drafting of a United Nations resolution for the establishment of the International Day of Epidemic Preparedness, set for December 27th. To sum up, among diplomatic and commercial accomplishments, Vietnam proudly closes one of the worst years in history.

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