American newspaper details Vietnamese economic "miracle"

Throughout the article Ruchir outlines that controlling the novel coronavirus (COVID-19) has allowed Vietnam to swiftly reopen its businesses and forecasts that the nation will have the fastest growing economy in the world this year.

Within days of China announcing its first COVID-19 case, Vietnam mobilised all resources in a bid to stop the spread of the disease. Indeed, the rapid isolation of outbreaks has served to keep the local death rate among the four lowest in the world.

While many places are suffering from enormous economic contractions and have been forced to ask the International Monetary Fund (IMF) for financial rescue packages, the nation is growing at an annual rate of 3%. Even more impressively, growth is being driven by a record trade surplus, despite global trade essentially collapsing, the article states.

Following World War II, “Asian miracles” grew their way out of poverty by opening up to trade and investment and becoming manufacturing export powerhouses. This first occurred with Japan, followed by Taiwan (China) and South Korea, with China being the most recently example.

During their boom years the original Asian miracles recorded annual export growth of close to 20%, nearly double the average for low- or middle-income nations at the time. Most notably, Vietnam has been able to sustain a similar pace for three decades.

Even with global trade slumping in the 2010s, Vietnamese exports grew by 16% a year, by far the fastest rate in the world and three times that of the emerging-world average.

According to the Ruchir, the country devotes resources to its exports by building roads and ports to get goods overseas, in addition to building schools to educate workers. The Government invests approximately 8% of GDP annually on new building projects and now enjoys a higher quality of infrastructure compared to other nations at a similar stage of their development.

Furthermore, it also helps see foreign money invested in similar sectors. Over the past five years, foreign direct investment (FDI) has averaged more than 6% of Vietnamese GDP, the highest rate of any emerging country. The majority of it goes to building manufacturing plants and other related infrastructure, with the majority of it coming from fellow Asian countries, including the Republic of Korea, Japan, and China.

“Vietnam has become a favourite destination for export manufacturers. Average annual per capita income in Vietnam has quintupled since the late 1980s to nearly $3,000 per person. Tech surpassed clothing and textiles as Vietnam’s leading export in 2015, and accounts for most of its record trade surplus this year,” the article notes.

As many countries tend to increase their trade protectionism, the nation has signed more than a dozen free trade agreements, including the European Union-Vietnam Free Trade Agreement (EVFTA).

“For now, Vietnam looks like a miracle from a bygone era, exporting its way to prosperity,” the author concludes.