COVID-19 early recovery

Lockdowns, quarantine and travel restrictions put in place to protect lives and prevent the spread of COVID-19 have disrupted established trade and investment patterns.

Sectors with a high dependence on the international movement of people — like tourism, education and airlines including air freight — have been particularly affected. Travel between Vietnam and Australia has virtually stopped, affecting two of the top ten exports by putting a halt to tourism (affecting Vietnam’s tourism exports to Australia) and preventing new students from travelling to start courses (affecting Australia’s education exports to Vietnam).

Women and men have also experienced the pandemic differently. Women in both Australia and Vietnam experienced greater economic insecurity than men, due to the compounding of pre-existing gender inequalities and the nature of the impacts of the pandemic. This included, for women (and girls), higher rates of job loss and income reduction, an increase in their unpaid care and domestic work, rises in the risk and rates of violence, and reduced access to essential services¹⁹.

The COVID-19 pandemic has impacted our economies

For both Australia and Vietnam, GDP growth was lower than the previous trend, but through government actions, including stimulus measures, we have been able to keep our economies resilient.

As is the case in many countries, the pandemic initially pushed the Australian economy into recession. Real GDP declined by 7.0% in the June quarter of 2020, the largest quarterly fall on record²⁰. For the year to December 2020, GDP growth in the Australian economy fell by 1.1%²¹.

Vietnam’s attractiveness as an investment destination, due to many years of economic reform and economic integration, supported its COVID-19 response efforts and achievement of positive GDP growth of 2.9% in 2020²². Vietnam was one of only a small number of countries in the Indo-Pacific to achieve positive economic growth in this period.

COVID-19 has spurred innovation in digital technology

Partly in response to these disruptions, COVID-19 encouraged a surge in digital innovation. For example, governments in Australia and Vietnam have adopted new technology to assist contact tracers to prevent outbreaks of COVID-19. Businesses have adapted new ways of operating, including to support remote working, adopted new digital tools to enhanced productivity and systems for improving customer service delivery.

These changes have accelerated trends in digital transformation, including Industry 4.0 and the application of digital and automated technology in production and service delivery. In this evolving ecosystem, Vietnam and Australia are presented with opportunities to improve productivity and engage more in services exports.

Many sectors have continued to thrive

Despite the economic effects of lockdowns and travel restrictions, some categories of trade have continued to thrive. The value of major Australian exports to Vietnam of iron ore and concentrates, aluminium, live animals, wheat and fruit and nuts all grew throughout 2020. Major Australian imports from Vietnam of crude petroleum, crustaceans, seafood, monitors, projectors and televisions, office machines, textile clothing and toys, games and sporting goods also grew in value in 2020²³. Many other new and emerging sectors have also grown throughout this period.

Our trade and investment relationship will grow strongly during the ‘new normal’

Vietnam’s and Australia’s early COVID-19 responses worked hard to contain the outbreak. These initial efforts to suppress the virus were effective. Although the emergence of new COVID-19 variants has presented challenges for both countries, consumer and business confidence is cautiously rebounding, and will be further supported by the vaccine rollout underway in both countries. Both Australia’s and Vietnam’s real GDP and employment have improved. This has also been influenced by an improvement in the global economic outlook, brought about by increasing vaccination levels across the globe and a consequent reduction in restrictions.

A ‘new normal’ is emerging. The growth potential and strong complementarities in our economies will remain: Vietnam will continue to industrialise and develop, producing goods for the Australian market, and Australia will continue to be a competitive and reliable supplier of commodities and services to Vietnam. Vietnam’s strategic investment interest in Australia remains strong, particularly to secure supply, including in iron ore and live cattle. Australian companies remain interested in exploring investment opportunities in Vietnam. These positive fundamentals will be strengthened by new innovations in digital technology and advances in automation through Industry 4.0.

Although a recovery in tourism and education service sectors will lag compared to the recovery in goods trade, both countries will re-emerge as attractive destinations for businesspeople, students and tourists. Reopening travel for tourism, education and work, when it is safe to do so, will further strengthen our respective economic recoveries and continue to build people-to-people links between Australia and Vietnam.