The bad news is Vietnam grew 0.36 per cent during the April-to-June quarter this year. And, the good news is Vietnam grew 0.36 per cent during the April-to-June quarter this year.
This little southeast Asian country's performance could be one for the books. And there are lessons, and warnings, in it for India.
On the face of it, for an economy that was growing at more than 7 per cent, a growth rate below 1 per cent may appear dismal. But the fact that it appears robust and optimistic when compared with the rest of the world that is bearing the brunt of an economic apocalypse during the same months of the pandemic-induced lockdown is indeed a feather in its cap.
In fact, Vietnam's measures to control the effects of the disease early is now being admired around the world—astonishingly, the country has not even had one death due to Covid-19, despite sharing a long land border with China and its first confirmed case being reported as early as back in January. There have been no new reports of community infection in the last two months.
Holding out hope, businesses and economic activity has picked up steam over the past few weeks. Many believe it is just a matter of time before Vietnam is back to its powerhouse performance.
For India, that is a challenge to its own immediate future plans, even as it provides ample opportunities to learn from.
In the whole India-China economic skirmish that is presently going on, Vietnam may appear as just a blip to most here, but it is actually of great significance to Modi's scheme of things for a post-pandemic India. A recent Nomura study had revealed that the maximum number of businesses and manufacturing leaving China were heading to Vietnam, more than any other nation. According to the study, of 56 businesses, 26 went to Vietnam, while just 3 chose India. Bigger number of companies had preferred Taiwan and the Philippines.
This came even as India has been trying its best to pitch 'Make in India' and announcing overtures like slashing corporate tax rates to some of the lowest in the continent, all in the hope of attracting investment.
The Nomura study is indication enough of what a post-China manufacturing scenario may look like. India may have its own great 'Atmanirbhar Bharat' plans, but if ground reality so far is any indication, Vietnam could well steal its thunder.
Vietnam is one of the fastest growing economies in the world. Last year, even as India was struggling with a protracted economy slowdown, the southeast Asian nation blitzkrieged ahead. According to the Asian Development Bank (ADB), regardless of the Covid-19 impact, Vietnam will rebound to nearly 7 per cent growth this financial year itself, despite the 0.36 per cent rate over the past three months. Reason? These three months were months of lockdown, quarantine and severe restrictions which have almost completely been lifted. Meanwhile, Vietnam's economy is projecting indicators for high domestic demand, strong manufacturing and processing industry, and high foreign direct investment, according to the ADB.
All those attributes are also the aims of PM Modi's #VocalForLocal mission, yet, not only are they nowhere close to reality, as the Nomura study shows, Vietnam has well and truly stolen the post-China manufacturing hub crown. In the whole of south and southeast Asia, while most economies are likely to decelerate due to the effects of the coronavirus, Vietnam's growth could be back on track, and at the highest rate of GDP growth, in no time. There is good (tips to pick up) and bad (the challenge is tougher) news in it for India.