The article cited Credendo’s latest national study, saying the nation has been one of the few highly resilient places during the unprecedented shock of COVID-19.
Rapid, strict and extremely effective containment of the virus after the outbreak in neighboring China largely explains this, the report states, noting that an early travel ban, along with large-scale testing and contact tracking on top of containment measures , helped keep the virus under control.
Although most countries have been severely hit and hurt by the economic impact of the virus, the Vietnamese economy has continued to operate at a steady, albeit slower pace, despite an initial period of extensive business disruption, the report said.
Credeno’s study indicates that last year the country had an exceptional economic performance, while advanced and emerging economies globally suffered a record recession.
The report highlights that, for the country, the drop in global demand was more than offset by the increase in global demand for medical, electronic and computer products caused by the COVID-19 crisis, resulting in an increase in the export of goods last year.
In addition, increased public investment in infrastructure has also played a significant role in supporting economic activity. In addition, a more accommodative monetary policy, such as the decision by the State Bank of Vietnam to cut interest rates from 6% to 4%, brought an extra stimulus.
According to Credendo, the country remains immune to new waves of the virus that are currently affecting many parts of the world, with Vietnamese authorities scheduled to vaccinate the general population.
Moving forward, the country confidently expects to continue its economic success story, especially as it has been characterized by an average growth rate of 6.8% over the past two decades.
The study emphasized that an impressive result in COVID-19 lies in the fact that the Vietnamese economic and financial risks have not increased. Although GDP growth has reached its lowest level since the mid-1980s, it remained in positive territory last year, in contrast to most of the country’s peers in the region. This is expected to accelerate sharply this year to 6.5%.
In addition, the country’s external debt ratio remains low and debt service has barely increased, while the current account surplus persists, despite some reduction, the report highlights. Although the post-COVID-19 outlook remains positive, there are still some risk factors behind a global economic recovery.
Most notably, the country has benefited from changes in the commercial environment and the continued reorganization of the supply chain.
The study indicates that while COVID-19 has shaken global supply chains, which could be beneficial in the long run, the country can be seen as a stable investment location for relocating business in Southeast Asia.
The implementation of free trade agreements (FTAs) signed by the country in the period from 2019 to 2020, such as the European Union-Vietnam FTA (EVFTA) and the Regional Global Economic Partnership Agreement (RCEP), will help to boost its trade and cash flows. IDE.
In recent years, the nation has become a magnet for the world’s largest multinationals, such as Samsung and Apple, which are attracted by strong growth prospects, a low-cost workforce and a favorable investment climate, which many choose to establish large factories sites.
Credendo also pointed out that at the 13th National Congress of the Communist Party of Vietnam, which ended in early February, the general political orientation for the coming years was confirmed. In the future, the economy and its continued liberalization will be a fundamental priority and guarantee the stability of the one-party regime.
During the COVID-19 pandemic, Credendo kept its political risk ratings unchanged. The political risk rating ST is likely to remain solid 2/7, thanks to resilient liquidity. Therefore, it predicts that the assessment will be further improved after the end of the COVID-19 pandemic, the global economic situation returns to normal and the strong Vietnamese economic momentum is resumed.
Credendo is a European credit insurance group with offices around the world. The group operates in all areas of commercial credit insurance and political risk insurance, in addition to providing risk insurance products globally.