Last year, due to the severe impact of the new crown epidemic and the international inflation situation, the GDP growth rate of many countries fell sharply. One exception, however, was one country, which, instead of declining, achieved impressive growth of 8% for the full year.
This country is Vietnam, and for a while "Vietnam has risen" and "Vietnam will replace China and become the number one manufacturing power in Asia" are constantly heard.
However, just half a year later, Vietnam's economy has experienced a flash crash. So, what does the specifics look like? Why did Vietnam flash crash after achieving high economic growth?
The economy was strong last year
The main reason why Vietnam's economy rose sharply last year, showing a "a little red in 10,000 greens", is that Vietnam has taken the right route in the face of the new crown epidemic and gradually relaxed strict epidemic prevention measures at the beginning and middle of the year.
Vietnam has a large population, low labor prices, and most of the country's eastern and southern coasts, which has a unique advantage in international shipping.
As a result, in the Asia-Pacific region, most of the orders from many countries that had implemented strict epidemic prevention and control measures have shifted to Vietnam. Vietnam also seized this wave of opportunities and made a lot of money.
At the same time, Vietnam is a standard developing country, with a large population and a weak foundation, plus since the 50s of the last century, it has successively fought wars with the three superpowers of France, the United States and China, and its infrastructure construction is relatively backward.
Therefore, the demand for investment is large, which will also be reflected in the increase in GDP.
This year there was a sudden flash crash
But as we enter 2023, everything seems to have reversed. Many of the scenes that the media previously bragged about did not appear. Some experts predict that Vietnam's GDP growth this year will significantly exceed last year's 8% after the global coronavirus situation improves.
Judging from the 3% data in the first quarter of this year, the whole year, let alone more than last year, is likely to decline after the decline on the basis of last year.
Vietnam's biggest decline was in the textile sector, where foreign exports fell by about 50 percent, followed by agricultural products, which fell by about 30 percent.
Now more than half of the second quarter has passed, and from the current export volume of Vietnam, there is still no reversal trend.
Not only that, the import and export of ships in many ports in Vietnam has dropped significantly, many coastal cities have closed down a large number of enterprises specializing in import and export trade, and many workers working in this field have had to turn to other industries.
Although there is no official confirmation, the growth rate of Vietnam's GDP and export trade in the second quarter will be significantly lower than in the first quarter, but there is no suspense.
What are the reasons behind this?
So, what exactly is the reason for this?
First, as the epidemic improved, manufacturing orders temporarily transferred to Vietnam last year once again chose other countries.
This is not to say that Vietnam's own advantages are gone, but in order to avoid risks, many countries try to diverge the layout of foreign economic and trade to avoid hanging from a tree when the risk comes.
For example, with the gradual liberalization of China's epidemic prevention situation, many orders for textile and garment and medical processing products lost last year have returned to China, which has caused a sharp decline in international trade in textile and medical products in Vietnam.
Second, Vietnam's economy is overly dependent on foreign trade, and fluctuations in energy prices have led to a sharp increase in trade costs.
As we all know, investment, domestic demand and exports are the "troika" that drives a country's economic growth, of which domestic demand, that is, national consumption and infrastructure investment and construction, is the most basic.
Most of Vietnam's long-term economic development has been driven by exports, that is, international trade, and the contribution rate of this "one carriage" to its economy is even more than twice that of other "two carriages".
In the case of a sharp increase in import and export costs, it will naturally have a greater negative impact on Vietnam.
Third, Vietnam's low level of scientific and technological research and development, the disadvantage of congenital economic deficiency is prominent. In Vietnam's foreign trade, a large proportion of primary products such as clothing and textiles, timber, agricultural products, minerals, or the foundries of large multinational enterprises use cheap labor to make profits. Therefore, Vietnamese products have insufficient scientific and technological content, insufficient scarcity, and are not irreplaceable.
Finally, although Vietnam is the so-called ally of the United States, the United States has used its dollar hegemony to "harvest" many countries for its own interests, and Vietnam is naturally no exception.
The recent weakness of Vietnam's currency is largely due to the "harvest" of the US dollar.
The so-called "flash crash" of Vietnam's economy is actually not as serious as said on the Internet, but compared with last year's outstanding results, this year's performance is indeed dismal, which is caused by a variety of reasons.
Readers, what do you think about this? What other reasons do you think there are for the sharp decline in Vietnam's economic growth this year?