The International Monetary Fund (IMF) has revised upward its 2021 growth forecast for the global economy to 6.0% from the prior estimate of 5.5% to reflect its optimism on solid recovery in post-pandemic 2021. The recovery will be led by large economies, particularly the US and China, which may in turn help boost CLMV economies. However, benefits brought to CLMV economies 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.
It is expected that Vietnam will benefit the most from the global economic recovery because its proportion of exports account for as high as 104% of GDP, in which 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% of GDP. 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, especially the robust Chinese economic growth, because 60% of FDI in Cambodia is mainly in infrastructure and property development projects related to China's “Belt and Road Initiative" (BRI). Regarding Lao PDR, it may be the country in the CLMV whose export structure is least favored by the global economic recovery, because its export proportion is relatively small compared to its economic size. In terms of FDI, Lao PDR may benefit from the global economic recovery less than Cambodia, since its FDI accounts for only 22% of its total investments. Meanwhile, Myanmar's benefits from the global economic recovery may be undermined by its political instability, while its FDI accounts only for 13% of its total investments, the lowest among CLMV countries.
In terms of tourism, most CLMV economies rely on Chinese tourists and regional tourists, while the vaccination rollouts in these countries are slower than those of western countries, therefore the possibility to achieve herd immunity in 2021 is very low. As a result, the recovery of tourism sector may be driven by western tourists, which accounts for only 10% of CLMV's total tourists.
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