The South-East nation of Vietnam has been highlighted as one of the most successful countries in minimising the impact of the coronavirus (COVID-19) on its economy, with the International Monetary Fund (IMF) saying the nation’s containment of the virus should allow its economy to stage a fast rebound in the post-pandemic world.
In a mission report published on Tuesday, the IMF said Vietnam’s growth this year is expected to be 2.4%, among the highest in the world, thanks to what the organisation said was the country’s “ decisive steps to contain the health and economic fallout from COVID-19”.
The IMF also said it expected Vietnam to mount a “strong recovery in 2021”, with growth projected to strengthen to 6.5% as domestic and foreign economic activity stabilised.
As of Thursday, Vietnam has one of the lowest death tolls and case rates from the virus, recording just 35 deaths and 1,300 cases since the onset of the pandemic.
The IMF’s assessment followed a separate assessment of Vietnam’s COVID-19 response back in June, when the organisation said the country’s “effective containment strategy should allow for a quicker rebound”.
The IMF’s view on Vietnam’s success has been echoed by investment firm Vietnam Holding Limited (LON:VNH), which in an update on Monday said the nation’s resiliency during the pandemic had “helped raise its profile as a major trade partner” and expected trade relations with the country and other nations to “gain further momentum”. The group also anticipated that the country’s economy will return to an expansion rate above 6% next year given its “multiple engines of growth”.
Vietnam Holding has what it describes as overweight holdings in selective companies across the industrial, retail, banking and telecommunications sectors in Vietnam, highlighting that in October its net asset value (NAV) stood at 206p per share, a 3% rise month-on-month and ahead of the 2.8% rise for the Vietnam All Share Index (VNAS).
Vietnam’s status as a trading partner is also likely to be bolstered by the recently announced creation of the Regional Comprehensive Economic Partnership (RCEP), a free trade agreement between 15 countries in the Asia Pacific region including Vietnam, China, Japan, South Korea, Australia and New Zealand that will form the world’s largest trading bloc.
Craig Martin, chair of Vietnam Holding’s investment manager Dynam Capital, told Proactive on Thursday that the RCEP deal could add 1% to the Vietnamese economy over the few years.
“There always gains from trade and for an open economy like Vietnam as a trading country it’s going to be good news”, Martin said.
He added that some of the beneficiaries of the RCEP deal will be players in the logistics sector such as Gemadept Corp, a port operator and the fifth biggest holding in the fund’s portfolio. Other sectors that could benefit from the deal include the financial sector which supports the country’s trading infrastructure.
“[RCEP] may take a few years to be ratified…but trade deals like this further accelerateS Vietnam’s growth story”, Matin said.
Shares in Vietnam Holding were up 1.9% at 160p in early afternoon trading on Thursday.
--Adds investment manager comment and updates share price--