A factory in Hưng Yên Province. Việt Nam is expected to be the only Southeast Asian economy to grow this year as a result of the pandemic. – VNS Photo Thu Ngân

HCM CITY – Việt Nam is expected to be the only Southeast Asian economy to achieve growth this year, with its GDP rising by a likely 2.3 per cent, according to a study by Oxford Economics.

The Global Economic Outlook report said recovery prospects look brightest for Việt Nam, which had contained the Covid-19 outbreak very effectively until recently.

The pandemic has delivered the biggest growth shock to South-East Asia since the Asian financial crisis in 1997, and regional growth is forecast to contract by 4.2 per cent in 2020, according to a new report.

The report, commissioned by chartered accountancy body, the Institute of Chartered Accountants in England and Wales, suggested that while economic activity was picking up again and growth was expected to eventually rebound to 6.4 per cent in 2021, the pace of recovery over the second half of 2020 would vary across the region depending on the easing of lockdown restrictions and improved export demand.

The Covid-19 outbreak had reduced global GDP by around 9 per cent in the first half of 2020, at least three times the size of the decrease during the 2007-09 global financial crisis. Despite a strong rebound in the third quarter of 6.4 per cent, global GDP would contract overall by 4.4 per cent this year.

However, momentum had been building in the second half of 2020, which would drive growth to 5.8 per cent in 2021, and lead the global economy to recover to its pre-crisis peak by the mid-point of next year, a similar time frame as the post-2008 financial crisis recovery.

The strength of the rebound over the coming quarters in South-East Asia remained uncertain, particularly in the fourth quarter of 2020, after the expected initial strong bounce in global trade and domestic activity post-lockdowns faded.

Additionally, varying success rates in containing the Covid-19 outbreak, and differing lockdown exit strategies would widen the disparities in economic growth in the region.

Economies which had convincingly contained the outbreak such as Thailand and Việt Nam would see a stronger recovery than Indonesia and the Philippines, which were battling new waves after restrictions were prematurely relaxed, the report said.

The pace of recovery in the second half 2020 would vary across South East Asia.

Mark Billington, ICAEW Regional Director, Greater China and South-East Asia, said: “The road to recovery for economies in South-East Asia will be a long one, with existing US-China tensions, a long-term slowdown in global trade activity, and a prolonged Covid-19 pandemic weighing on the region’s growth prospects.

“While each region’s economy has suffered due to the crisis, the unique economic structures mean the crisis has played out in different ways.

“Ultimately, countries that can strike a balance between resuming economic activity and keeping the outbreak under control will see their economies bounce back faster than the rest.” – VNS