While many countries are bracing for the global recession, Vietnam may be able to avoid, and their citizens are confident this will occur.
The global economy has faced a serious downturn since the start of the Covid-19 pandemic. Many countries are struggling to help their citizens to not only stay healthy, but to survive during this time when many have lost their jobs and have no source of income (see the following infographic).
This has led to a recession in many countries, and there are serious concerns that a global recession is upon us. Many industries have shutdown, and there is a growing belief that this is only going to get worse. These are not random thoughts by any stretch of the imagination. Countries are spending money they do not have and the prospects of trying to restart the economy is not looking positive.
Not all countries are facing this prospect, however. Some countries are doing quite well and appear to have a plan in motion that will avoid any serious recession. Vietnam is one such country, which many analysts believe is going to weather this economic storm without too much damage.
Measures Led to Success
Early on, Vietnam imposed stringent measures to slow down the virus. These included imposing border restrictions, implementing social distancing measures, and reducing the numbers of people gathered in one location. Students were sent home from school almost immediately, and in school instruction moved to home within the first few days that the virus became a concern. This was back in early February.
While many countries imposed these same measures, in Vietnam they have worked. This has helped the country to keep its numbers of cases extremely low. In a country of 100 million people, there have only been 271 reported cases of the virus and no cases of a person dying directly from the illness. It is truly remarkable.
That kind of success has led economists to believe that the economic crisis may bypass Vietnam as well.
“They are not going to be immune to the slowdown of external global demand … But we don’t expect them to fall into a recession or contraction,” said Sian Fenner, lead Asia economist at Oxford Economics.
This has been the conclusion on how Vietnam will be affected economically by the outbreak.
Benefitting from a Spat
One of the interesting factors supporting this projection has been the U.S.-China trade war. With both countries blocking goods coming to their country from the other, Vietnam has become an instant recipient. Goods that would have normally been shipped to one of the superpowers, now finds its way to Vietnam, ensuring that there is no gap in the supply lines.
With medical supplies rolling in and there being no shortage of food, the citizens of Vietnam have been able to stay healthy. It is often people who have underlying conditions or who are in poor health who are prone to contract the illness, but Vietnam looks like they have been able to reduce these types of risks because of the trade war. Those who are well fed are less likely to become ill. The trade war has helped to make that a reality in Vietnam.
Building the Confidence of the People
Because of the actions that the government took and the fact that there are so few cases in the country, many Vietnamese are confident that their country is going to be spared from the full impact of the illness. Consumer confidence is low in most places across the globe, but not in Vietnam.
According to a report in the Financial Times, the world economy is expected to contract by as much as 7% this year. That is the biggest contraction since the 1930s, when the Great Depression crippled many nations economically.
A study that questioned over 27,000 people from across the globe found that a significant portion of those surveyed were expecting a severe economic downturn within the next 12 months. In Mexico, for example, 75% of those questioned believed without they would be facing severe economic times in the upcoming months.
This kind of pessimism was true in countries like France, Spain, and the United Kingdom as well, but it was not limited to Western nations. In Hong Kong, there was also 75% of those surveyed believed in a severe recession, and 64% of those in Singapore believed this to be true.
However, this was not the case in Vietnam. Only 24% believed there would be some form of severe depression or recession within the next 12 months while 56% believed that the country would remain stable. That was the highest of all countries surveyed, and directly reflects the impact of the preventative measures that were taken.
Keeping It from Becoming an Issue
While Vietnam has been successful in keeping the pandemic under control, many analysts and economists are concerned that there could still be a serious outbreak within the country. Singapore has had over 18,000 cases, the most of any nation inside the region. According to reports, most of those cases have arisen because of foreign workers, typically men who traveled to Singapore for work.
Vietnam has a large foreigner-based labor force, and there is a concern that opening the country back up could lead to a severe outbreak. This is leading some to propose more restrictive measures before allowing foreigners to return to the country for work, maybe even imposing an extended restriction period.
The question is how feasible is that suggestion? While the country has not been severely impacted by the global slowdown, it is still not running at the same pre-crisis levels. Restricting foreign labor could make it impossible for the country to return to the vibrant economy it was enjoying in January.
In addition, 4% of the national GDP comes from tourism. That is a large enough number to understand that restricting foreigners from coming to Vietnam could have a significant impact on whether the country is able to grow economically.
The Casino Industries Impact
One area of the economy that is most impacted by both of these factors is the casino industry. With one of the largest resort-casinos in the region, tourism is imperative to the success of the gambling industry in Vietnam. So is foreign labor. However, the country must walk the delicate tightrope of protecting the health of its citizens while also ensuring that the economy can prosper as well.
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This may be mitigated by the fact that local use of the casinos increased greatly between 2018 and 2019. A program that encouraged local residents to use the casinos was quite successful and this could help to keep the economy flourishing, reducing the losses from tourism being restricted.
What may be the reality is that tourism is going to be limited until there is a proven vaccine that is created. Regardless, the Vietnamese seem confident that they will be just fine. They are likely right.