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27 Apr 2021

International Economy

CLMV Countries May Enjoy Varying Benefits from Solid Global Economic Recovery (Current Issue No.3213)


​It is projected that the global economy will record a solid recovery in post-pandemic 2021 as reflected by the International Monetary Fund's decision to revise upward its 2021 growth forecast for the global economy to 6.0 percent from the prior estimate of 5.5 percent; the recovery will be led by large economies, particularly the US and China. This may in turn help boost CLMV economies that are heavily dependent on exports. However, benefits from bright prospects seen in the global economy to CLMV's economic developments may vary depending on the degree of their connectivity to the global economy through various channels, such as exports, repatriations made by their workers, foreign direct investment (FDI) and tourism. Country-specific factors may determine their economic directions, as well.

            It is expected that Vietnam will benefit the most from the global economic recovery compared to its peers in Indochina because electronics account for the largest share of its production and export structures. Besides its outward trade, Vietnam's economic performance will be supported by repatriations by its overseas workforce as such amounts account for up to 5.8 percent of GDP and most Vietnamese workers are employed in Taiwan, South Korea and Japan, which are projected to significantly benefit from the global economic upturn. Meanwhile, Cambodia's economy will also be boosted by a bounce back in the global economy because its exports are primarily geared towards the US, China and Europe, which are economies that drive global growth. Additionally, since Cambodia's investments are mainly in infrastructure and property development projects related to China's 'Belt and Road Initiative' (BRI), anticipated robust Chinese economic growth will likely keep those projects on track. Regarding Lao PDR, aside from exports, its economy may not substantially be supported by the global economic upturn, in particular FDI from China. Meanwhile, Myanmar's benefits from the global economic recovery may be undermined by its political instability.

International Economy