Vietnam, a country known as the "Pearl of the Orient", is experiencing an unprecedented economic crisis. Once upon a time, it was regarded as the fastest-growing "tiger" in Southeast Asia, and its GDP growth rate was as high as 8%, making it a bright spot in the regional economy. Today, the trade deficit, the withdrawal of foreign capital, and the rise in inflation...... A series of negative factors followed, causing Vietnam's economy to fall into a "Waterloo".
Gone are the rhetoric of the past, and Vietnam has had to put aside its ambitious goal of "surpassing China within five years" for the time being, and instead deal with the current predicament in a low-key manner. This sudden economic turmoil dealt a heavy blow to Vietnam. This "little China" is helpless and can only watch his economic dream come to naught.
A few years ago, Vietnam began its own path of "reform and opening up". Learning from China's experience and experience, it has actively introduced foreign capital, set up processing trade, and deliberately imitated the pace of China's reform and opening up. For a time, attracted by cheap labor and abundant natural resources, Vietnam did attract a large influx of foreign capital, and its economy took off suddenly.
However, they seem to have forgotten a truth: no matter how much nutrients they eat, they can't grow taller. Vietnam has seized the opportunity when it comes, but it is not enough to rely on external forces alone to maintain its vitality in the long term.
Vietnam's processing and manufacturing industry is heavily dependent on foreign capital and imported raw materials, and its economy is in jeopardy if the external environment changes. After the outbreak of the Russia-Ukraine conflict in 2022, the global economy suffered a heavy setback, and the prices of energy and raw materials skyrocketed, which directly led to the sharp increase in the production cost of Vietnam's OEM industry. At the same time, Western sanctions against Russia have disrupted the supply chain of raw materials, and many Vietnamese processors are unable to maintain production due to lack of raw materials.
A series of problems followed, pouring cold water on Vietnam's already fragile economy. The plot that happened next can be said to be out of control. Domestic and foreign orders have plummeted, exports have been blocked, jobs have been lost, and residents' spending power has declined...... Numerous contradictions piled up, which eventually led to hyperinflation, with domestic inflation reaching as high as 10% and the economy entering a recession.
In July 2023, it was really unbearable, and the central bank of Vietnam had to raise interest rates sharply, which was choking the throat of the Vietnamese economy. Affected by this, the upstream and downstream industrial chains were instantly damaged, and a large number of small and medium-sized enterprises had their capital chains broken and were forced to stop production or even go bankrupt. Foreign confidence in Vietnam fell to a freezing point, and they withdrew one after another, and the outflow of funds brought about a liquidity crisis. The economic bubble finally burst completely.
The current state of Vietnam's economy is staggering: wages are falling, investment is drying up, and unemployment is soaring...... This "Pearl of the Orient", which was pinned on high hopes, is now eclipsed and has fallen into a downturn and stagnation. The nerves of the Vietnamese people have also become allergic, and there have been many anti-government demonstrations, and social contradictions have intensified.
Those who were once reluctant to accept China's development are now silent. Vietnam has finally realized that blind catch-up will not work, and it must examine its own shortcomings.
Vietnam's economy is in trouble due to the following causes:
First, the industrial structure is too simple, overly dependent on labor-intensive processing trade, and lacks independent innovation capabilities and high value-added industries. Such a structure makes the Vietnamese economy less resilient to risks and more vulnerable to external shocks.
Second, infrastructure construction is seriously lagging behind, which is not conducive to industrial upgrading and transformation, and also restricts the expansion of domestic demand. According to statistics, Vietnam's Doing Business Index is at the bottom of the list among ASEAN countries.
Third, compared with China's comprehensive national strength and ability to respond to crises, Vietnam is obviously one level behind. The financial system is fragile and the government's macroeconomic control tools are weak, making it difficult to cope with economic turmoil.
With the loss of economic pillars and the combination of internal and external troubles, the top priority at the moment is to rebuild external confidence, stabilize the political situation, and at the same time accelerate the pace of reform, improve infrastructure, and cultivate a domestic demand market.
Vietnam has finally learned the hard way and clearly realized that the path of blind imitation will not work, and that development must be based on national conditions. It is striving to find a path of development that suits its own characteristics, such as vigorously developing agriculture, tourism, and other traditional advantageous industries to achieve economic diversification.
In any case, Vietnam is no longer the "madman" it once was, and now it is reinventing itself with real actions. Compared with blindly exaggerating the poor performance of "strong soldiers", a rational and humble Vietnam is what Southeast Asia, a "prosperous" region, particularly needs.
Of course, this takes time and process. But the direction has been set, and Vietnam will surely turn the gloom around and move towards rejuvenation in the future. I wish this friendly neighbor an early resumption of the road of economic development.
The gloom that Vietnam has encountered this time has a profound lesson: it cannot take off for a long time with external forces alone. Every country should formulate its development strategy based on its own national conditions and adapt measures to local conditions, instead of blindly imitating and arrogant itself. Only in this way can we truly achieve sustained and healthy economic development.
After this lesson, I believe that Vietnam will learn from its experience, act prudently, and push forward the process of reform and opening up in a down-to-earth manner. At that time, a more open and dynamic Vietnam will surely reappear in front of the world.