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The short to long term implications for Vietnam are hard to predict. The coronavirus pandemic has already changed the way people live in Vietnam and in most countries around the world.

Vietnam’s Economic Success Story Hammered by Covid-19
Photo: AFP
Vietnam’s development strategy requires an urgent upgrade. Past growth has been impressive. But as a favorable domestic and international environment changes, future growth must be productivity-driven— obtaining more and higher quality output from firms, infrastructure, workers and natural resources. 
The World Bank’s Vibrant Vietnam report discusses priorities for an upgraded growth model based on extensive consultations, international experience and academic findings. This brief note summarizes the most important insights.
Vietnam has been a development success story. Over the past two decades median household income quadrupled and extreme poverty dropped from 50 percent to about two percent. Great strides have been made to increase life expectancy and expand schooling. 
These development outcomes have been the result of effective economic and social policy making, starting with the Đổi Mới reforms in 1986. But progress was also helped along by beneficial domestic and global trends.
New agricultural technology propelled the structural transformation with a shift of 30 percent of the workforce out of the rural sector and into more productive jobs. A young population expanded the labor force. Vietnam also took advantage of the boom in global trade. Commodity exports were the first to take off thanks to a relative abundance of fertile land and water, followed by labor-intensive sectors like textiles, and, most recently, electronics. Vietnam’s policy makers, entrepreneurs and workers saw opportunity and took advantage.
These favorable tailwinds may now turn into headwinds. The demographic dividend will fade as fertility rates drop and the population ages as it has in other East Asian countries. Automation and other disruptive technologies can offset a lower labor supply but could also eliminate precisely those jobs on which a large share of Vietnam’s labor force currently depends. 
And the combination of rising pollution and climate change is affecting health, quality of life and, increasingly, output from both the rural and urban sectors. The external environment is also changing. Global trade has been declining over the last ten years. 
Vietnam’s exports held up better than most, but rising trade tensions and trends like reshoring could spell danger for Vietnam’s exporters.
The COVID-19 crisis could provide a seismic shock. It is still early days of the COVID 19 crisis, but each global crisis alone could permanently change the international system and balance of power as we know it. The short to long term implications for Vietnam are hard to predict. The coronavirus pandemic has already changed the way people live in Vietnam and in most countries around the world due to rising health concerns and restrictions in terms of mobility. 
While the magnitude of the health crisis appears limited in Vietnam, with only 250 infected people and no registered death (as of early April 2020), the economic and social costs have been big and expected to grow bigger depending on the extent and the duration of the pandemic in the country and in the rest of the world.
The GDP growth rate is forecasted to fall by 3-5 percent in 2020 compared to pre-crisis projections, with increasing pressure on the Government’s budget and the balance of payment due to declining tax revenues, exports and capital inflows. The economy is, however, expected to resume faster growth in the second part of 2020 and in 2021 when the country and the rest of the world should get out gradually of the COVID 19 crisis.

DIEP NGUYEN