By the year 2050 we will witness a significant transformation in the economic and political order in the Indo-Pacific region. Today’s emerging markets will become the economic giants of tomorrow. Indonesia and India will climb up the ranks, growing at a rate twice as fast as incumbent G20 nations like the U.S., Japan, Germany and the United Kingdom. Vietnam is estimated to progress from the world’s 32nd largest economy and become one of the top twenty largest economies within the next two decades.
While Australia’s status as a developed economy will continue, it is predicted Australia will fall behind from 19th to 28th place and as a result, Australia will find itself in a geographic region of economic giants. In terms of growth, PwC predicts that Vietnam’s average real GDP growth will be 5 percent per year compared to Australia’s 2.7 percent per year estimate. Geopolitical trends have given the surrounding context a lot of uncertainty. Assessments of America’s influence and its role in Asia have diminished since the 2016 election of President Donald Trump. The American exit from the Trans-Pacific Partnership trade agreement soon after President Trump’s inauguration and his decision not to attend the East Asia Summit are both clear signals of his administration’s lack of interest in shaping the economic and political future of the region.
Alongside the wavering influence of the US looms the rise of China, over which hangs the question of whether or not it will behave like a responsible power in the region. Vietnam has the South China Sea, a bitter border conflict in 1979, and over a thousand years of history to remind it of the fact its giant northern neighbour is not always peaceable. These sharp geopolitical realities justify Australia’s and Vietnam’s pursuit of a strategic partnership. A case not often presented is the justification for an economic partnership. Vietnam is looking for reliable partners to help keep its ascendant economy on track and continue its integration into the global economy.
A distinct opportunity presents itself to build a stronger relationship with Vietnam that is in line with the trajectory of the Indo-Pacific region, which not only focusses on security and strategic partnerships, but on economic opportunities as well. The story of Vietnam’s domestic economic transformation since the end of the Vietnam War and Australia’s early role in that transformation sets a strong precedent upon which an economic partnership can be built.