Viet Nam’s enviably success in managing the COVID-19 outbreak and subsequent ability to lift movement restrictions well ahead of most East Asian nations has reached a hurdle after local transmission was confirmed in Danang in late July, and the first deaths recorded.
The new outbreak has reached at least 10 locations in the country, including Hanoi and Ho Chi Minh City. There are plans to test Danang's entire population of 1.1 million people, part of "unprecedented measures" to fight the outbreak.
There are concerns that the new strain found in Danang is a more contagious one, and that each infected person can infect 5-6 others, compared to 1.8-2.2 in the previous wave.
Social distancing measures have been reinstated in the city until further notice, more than three months since the last case was reported in the country. Non-essential businesses such as bars and nightclubs in Hanoi and Ho Chi Minh City have also been closed until further notice. Gatherings of more than 30 people have also been banned.
Viet Nam reported 1.81% GDP growth in the first half of 2020 – its lowest since 2011, due to the pandemic as per the General Statistics Office (GSO). Government economic advisors have stated that economic growth is slowing down to 3% to 4% this year due to the impact of the pandemic, and the Government will consider cutting policy rates to stimulate growth.
A World Bank report, ‘What will be the new normal for Vietnam? The economic impact of Covid-19’, outlines the potential trajectory for the Vietnamese economy in the post-COVID world. It suggests that if the global situation gradually improves, economic activity should rebound in the second semester of 2020 so that Viet Nam’s economy will grow at around 2.8% for the entire year, and by 6.8% in 2021. With less favorable external conditions, it predicts the economy will expand by only 1.5% in 2020 and 4.5% in 2021.
Viet Nam was already a favoured location for foreign investors looking for an alternative manufacturing hub to China following escalating trade tensions between it and the United State, and the Vietnamese Government is already looking to continue building on that momentum. Under a scheme in which the Japanese government will fund a production shift from China, 15 Japanese firms have registered to move to Viet Nam.
New Zealand and Viet Nam bilateral relationship elevated
New Zealand’s bilateral relationship with Viet Nam was formally elevated in July 2020 with the strengthening of the 2009 Comprehensive Partnership to that of a Strategic Partnership; focussing on trade, agriculture, education, and development.
New Zealand and Viet Nam have committed to individual and joint actions to open markets and reduce barriers to bilateral trade, especially for agricultural, seafood, and timber products through enhancing market access, trade facilitation, information exchange, and collaboration between customs, and agriculture, food safety, and animal health agencies.
New Zealand and Viet Nam have also committed to promoting investment in both directions and encouraging inclusive growth,including cooperation in the development of micro, small and medium enterprises (MSMEs), indigenous or ethnic minorities businesses, women entrepreneurs and other important areas.
In order to take the full advantage of opportunities, it is crucial for New Zealand businesses to invest in market research now to understand market insights and consumer insights, especially when we are seeing changes in consumer lifestyles and behaviours in adapting to the new normal during and post-pandemic.