Nikkei Asia: Viet Nam seen fully recovering in 2021

A bedding factory in Ha Noi: Viet Nam has succeeded in curbing both the health and economic impact of COVID-19. (Photo: Reuters)

According to Nikkei Asia, Southeast Asia's six leading economies are expected to face diverging fiscal paths in 2021, with Viet Nam, Indonesia and Malaysia gaining from pre-pandemic levels while Singapore, the Philippines and Thailand struggle to return to health.

Nikkei compiled the International Monetary Fund's country-based projections for real gross domestic product, setting the 2019 figures as a baseline of 100. Viet Nam, Indonesia and Malaysia all scored above the 100 mark for 2021, meaning their economies are seen expanding next year compared with the level before the coronavirus outbreak in 2019.

Still, all six countries face continued uncertainties from the epidemic, as well as the new incoming administration in the US.

Viet Nam is forecast to lead the group with a projected growth index of 108.4. S&P Global predicts the Vietnamese economy will expand 10.9% in real terms in 2021, more than any other country in the Asia-Pacific, following a 2.91% uptick this year.

The country was also the only one of the six to log real economic growth in 2020, thanks to its quick success in curbing the coronavirus pandemic. Its leadership also bolstered effective demand through public projects ahead of the Communist Party Congress that begins there in January.

"Many global companies are flocking to Viet Nam, which is a boon to its exports," said Yuta Tsukada at the Japan Research Institute. Given the low production costs in the country, Tsukada sees more companies shifting operations there from China, should the trade war between Washington and Beijing continue.

Indonesia came in second with a growth index of 104.5. The so-called omnibus law on job creation signed by President Joko Widodo in November is expected to give companies greater freedom and help attract foreign investment when it takes effect. Malaysia, with an index of 101.3, could also see exports of mainstay products like electronics recover once the global economy stabilizes.

Meanwhile, Singapore, the Philippines and Thailand are not expected to cross the 100 mark until 2022.

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