Wednesday, April 01, 2009

Vietnam is the world's poster child

Strange days indeed.

The Wall Street Journal blog:

"Not all emerging markets are created equal. While the likes of Thailand, Malaysia and Singapore are facing the prospect of sharp contractions this year, Vietnam’s economy is still on track to expand 4.5% this year, according to the latest projections from the Asian Development Bank released on Tuesday. Vietnam’s apparent buoyancy, along with the 7% growth rate the ADB projects for China this year, helps explain why the Manila-based development bank expects Asia’s developing economies as a whole to grow 3.4% this year.

So how is Vietnam doing it? Like some of its neighbors, Vietnam has a large export industry which is being beaten up badly by the global slump. Vietnam is also a fairly recent arrival in the global supply chain. It hasn’t generated the kind of trade surpluses and foreign reserves that allow China to throw hundreds billions of dollars at its slowing economy. Vietnam barely has enough foreign reserves to pay for three months-worth of imports.

Instead, Vietnam’s growth is coming from the momentum built up from the last few years’ of rapid economic growth. There is now a brand new middle class in the country which didn’t exist before and its spending power has kept Vietnam chugging through the downturn. In fact, the ADB’s Hanoi-based economist Bahodir Ganiev told reporters earlier, “when it comes to Vietnam, we actually should not use the word ‘downturn’ or ‘recession’. It’s just a slowdown.”

It's here. More here.