Singapore, Feb 17 (ANI): With the COVID0-19 novel coronavirus outbreak consuming news headlines in this part of the world, there appears to be little in the way of any positive news on the economic front.
Singapore's Prime Minister announced that the economic impact of the virus outbreak has already exceeded that of SARS in 2003 and warned that a recession is possible. Although official estimates are that tourism revenue will tumble between 25 to 30 percent, some airport workers observed that travellers arriving at Changi International Airport could have halved. This is not surprising considering that some countries have advised their citizens to be cautious if travelling to Singapore and in some cases, advising them against travelling here unless absolutely necessary.
That last major coronavirus outbreak reduced Singapore GDP by 0.5 percent. One week before the most recent comments by Singapore's PM, DBS Group Research had already downgraded its Singapore GDP growth projection from 1.4 percent to 0.9 percent.
With Singapore's COVID-19 cases approaching the 70s, a panic attack led to residents clearing out the shelves in supermarkets last week. Supermarkets took a few days to restore normalcy and calm because there were not enough delivery vehicles to re-stock the shelves and not because of a lack of supplies.
China, where the number of cases is fast approaching 70,000 and related fatalities is frighteningly close to 1,700, the economic impact is yet to be seen. Factories and offices are just beginning to re-start after the Chinese New Year break which was extended by a week to provide a buffer to curtail the virus spread.
Last year, the Chinese economy grew at its slowest pace in 30 years of 6 percent bogged down by the American tariff hikes. The hope that 2020 will be a better year has been somewhat dampened following the spread of the pathogen with economists now estimating a growth rate of around 5 percent.
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Does this situation present an opportunity for other countries?
Vietnam is one that comes to mind. Vietnam's GDP grew at a rate of 7.1 percent in 2018, according to the World Bank. It is the fastest-growing major economy in Southeast Asia, and businesses there were recently buoyed by foreign investments and the migration of some manufacturers out of China due to US-China trade dispute. It has also started attracting the attention of Australian businesses like ANZ Bank, Austal (shipbuilding) and Linfox (logistics) in addition to construction firms.
The government has attracted foreign investments by offering tax breaks as well as making it easier to do business in the country.
Vietnam has also been climbing the manufacturing value chain. From textile and garment products more than ten years ago, it now has the skill and capabilities to produce more sophisticated electronic gadgets and components.
It seemingly has the potential to scale and take on more of the manufacturing slack that may result from Chinese workers being impacted by the virus outbreak. This depends on the availability of skilled manufacturing labour.
However, Vietnam is also feeling the negative impact of COVID-19.
China is Vietnam's largest trading partner with two-way trade standing at USD107.6 billion. A manufacturing ecosystem exists between the two countries and a reduction in capacity or demand in one country will have an impact on the other, especially if the reduction happens on the side of the larger partner. China also consumes a significant amount of what Vietnam produces.
Just last week, Vietnam sent a trade delegation to New Delhi to engage with Indian Importers Chambers of Commerce and Industry, the Indian Trade Promotion Council, and supermarket chains in working sessions to seek ways for India to absorb more Vietnamese products as demand for Vietnamese products from China dwindled due to the virus outbreak.
The visit was wrapped by talks between Vietnam's Deputy Minister of Industry and Trade, Cao Quoc Hung and Commerce Secretary Anup Wadhawan.
Mr Hung was persuading India to absorb such products as fresh fruits like lychee, longan, rambutan and dragon fruit, farmed fish and also garment-textile products
Vietnam is India's fourth-largest trading partner in the Association of South East Asian Nations (ASEAN) and among India's top ten trading partners.
India-Vietnam trade has been growing at a steady clip recently. It has grown almost 48 per cent over the last five years. According to data from the Indian Commerce and Industry Ministry, bilateral trade stood at USD13.7 billion for FY2019 with exports at USD6.5 billion.
India and Vietnam are signatories in India ASEAN Agreement on Trade in Services and India ASEAN Agreement on Trade and Investment implemented in July 2015. They also have in place an MOU on Economic and Trade Cooperation signed in May 2018.
The top exports to Vietnam and meat, seafood and agricultural products, metals, textiles and clothing, chemicals, machinery including electrical parts. Top imports from Vietnam include electrical and electronic products and parts including telephony equipment, television and video screens, digital cameras, inorganic chemicals, copper and copper products, iron and steel.
The two countries agreed at the meeting that with the strong comprehensive partnership, there is room to boost their bilateral trade through the export of commodities to each other's markets and that they will aim to increase trade promotion activities and business exchanges in 2020.