Vietnam will likely be the second fast-growing economy in Asia-Pacific this year, only behind China, as the Southeast Asian country has emerged as a bright star in containing the Covid-19 pandemic, S&P Global Ratings has forecast in its recent report.

S&P Global Ratings has revised up Vietnam’s GDP growth to 1.9% this year from 1.2% previously. “The economy is well-positioned to enjoy some lift from improving global trade, especially electronics. Tourism will remain largely absent for the foreseeable future, but domestic mobility is normalizing faster than most other parts of the world.”

Overall, Vietnam is expected to be one of the leaders of the post-Covid recovery, able to close its output gap by 2022. Its 2021 growth is forecast at 11.2%, the highest in the Asia-Pacific region.

S&P Global Ratings also revised inflation forecasts higher, up to 2.5% in 2020 from 1.8% previously, in part due to moderately stronger-than-expected domestic demand.

The US-based agency anticipated the country’s monetary policy will remain broadly unchanged. The Vietnamese central bank has brought the dong back to around last year's levels, having only allowed a short period of depreciation at the peak of the crisis, it said.

S&P Global Ratings noted that the key domestic risk remains another Covid-19 wave although authorities have shown their ability to quickly contain outbreaks.

Asia-Pacific is projected to shrink by 2% in 2020 and rebound by about 7% next year. China, where the coronavirus broke out, will likely see its economy grow 2.1% this year, the fastest pace in the region.