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Vietnam’s Economic Growth During Covid-19

Since the first Covid’s outbreak, the pandemic has wreaked havoc globally. In Viet Nam, measures to prevent the spread of the disease are being constantly implemented in order to quickly control the situation caused by many variants of the Covid strain. The vaccine has not been widely disseminated enough to achieve herd immunity yet. Thus, economic losses were inevitable when it came to basic socio-economic activities which had to be restricted . However, Vietnam’s economy still achieved positive growth during this difficult time, thanks to the early and effective implementation of anti-epidemic policies.

Prior to the pandemic, Vietnam was a rapidly expanding and dynamic economic market. According to the General Statistics Office, Vietnam’s economy is still growing at an annual rate of 2.91 percent, which is higher than the previous year. The size of the economy also reached US$343 billion, making it the fourth largest economy among Southeast Asian countries. Prior to the pandemic, Vietnam had maintained GDP growth rate of over 5%. Despite being affected by the fatal epidemic, Vietnam’s economy is still showing good signs of development. Vietnam succeeded in controlling Covid in the country and achieved 2.91 percent growth rate while the economic situation in other countries has declined sharply.

Measures to prevent the spread of the epidemic have been set out flexibly to balance between the economic activities and controlling the epidemic. Such measures included limiting international flights, avoiding large gatherings, strictly implementing 5K measures, epidemiological investigation, immediate isolation of Covid-positive cases etc. As a result, from mid-2020, socio-economic activities in the country are still normally taking place, even domestic tourism has been promoted and is bringing revenue to the tourism and hospitality industry which was earlier heavily affected by the virus. Moreover, production and export activities have always been maintained to ensure domestic supply and export of traditional Vietnamese goods. In the agricultural, forestry and fishery sectors, the output of some perennials, main livestock products and shrimp has increased quite significantly in 2020, bringing the growth rate of this sector to 2.68%, higher than in 2019 (2.01%). To deal with climate change, EC yellow card in fishery exploitation has not been removed. However, this region has reaped positive growth results made possible by great efforts to create solutions to change the structure of crops. In particular, exports of agricultural products increased sharply during the Covid-19 epidemic. Rice export turnover reached more than 3 billion USD for the first time, up by 9.3% compared to 2019.

To deal with the Covid-19 epidemic, prime minister and central authorities recently approved many documents of the Government issuing guidelines to implement various support policies and practical measures for businesses to withstand the economic struggle, gradually adjust production plans and business, and to enhance digital transformation and trade promotion. Thereby, economic activities quickly returned to orbit and the overall socio-economic situation remains stable. This demonstrates that Vietnam’s economic recovery is very strong, and the market is abundant in potential for investors. Vietnam is also a stable investment hub with many advantages in terms of people and resources.

In addition to traditional economic sectors, new economic sectors are also showing potential, under the influence of digital transformation,  in the fields of green economy, creative economy, digital economy, smart urban development, logistics infrastructure, etc, . These are good opportunities for investors to come to Vietnam to develop in this new economic space. In addition, due to the impact of Covid, many businesses are strengthening their links and restructuring measures have solidified state-line enterprises and commercial banks. M&A activity will also be promoted extensively. Specifically, in only 9 months of 2020, up to 19 transactions between Japanese investors and Vietnamese enterprises were announced. These Japanese enterprises are involved in the areas of real estate, construction, finance, banking, pharmaceuticals and healthcare. South Korean investors were also active in M&A. Some notable deals in the first 9 months of 2020 include SK Investment III (a subsidiary of SK Group) receiving more than 12 million shares, equivalent to nearly 25% of Imexpharm Corporation’s shares, and Lotte Chemical (a subsidiary of Lotte Group) acquiring VinaPolytech. It is forecasted that M&A activity in Vietnam could recover from mid-2021, and the market size can return to the normal benchmark at 5 billion USD.

Despite the difficulties caused by Covid-19, Vietnam still strives to ensure public safety and to take measures to improve the development of the economy for a quickly recovery post-Covid.