This Country Avoided Recession for 30 Years

This Country Avoided Recession for 30 Years

Last updated July 2nd, 2023.


Recessions are a fact of life in most countries. They seem to arrive every 7 years or so on average, leaving unemployment and stock market collapses in their wake.

Many investors dream of endless growth without worrying about the next recession or uncertainty over when it will strike.

Wouldn’t it be nice if you could park your money in stocks or property while watching your assets climb in value each year?

Of course, nobody can promise that. “Past performance is no guarantee of future returns” as the financial industry constantly reminds us.

Still, emerging markets in Asia haven’t suffered through any of the recessions that most of us have within our lifetimes.

Welcome to Vietnam: a country with a long history of avoiding recession. Indeed, they’ve skipped every single financial crisis for more than 30 years.


Vietnam GDP Growth Chart 1980s

A chart showing Vietnam’s historical GDP growth, going all the way back to the 1980s.


It’s one of about five countries in Asia that missed the Asian Financial Crisis in 1998, skipped the tech bubble of the early 2000s, and outgrew the Global Financial Crisis in 2008.

Despite the war that happened last century, Vietnam today is home to a rising middle class of 97 million inhabitants and growing.

The nation’s manufacturing sector is booming while Vietnam’s two different stock exchanges – one in Saigon and another in Hanoi – have more than 800 listed companies between them.

Vietnam is technically communist. Regardless, you might be surprised to learn that Pew Research shows they have more favorable views of capitalism than any other country – even above Germany and the United States.


Why Has Vietnam Avoided Recession?

Frontier markets in general are less correlated with the rest of the world economy. Vietnam is certainly no exception.

Why are frontier markets likely to avoid a recession? Well, their growth depends much more on internal factors than global economic whims.

For example, you can now find IKEA and Papa John’s Pizza on practically every corner of the globe. But one negative result of globalization is that when an economic crisis hits any major country, it has a domino effect.

Multinationals stop investing abroad when they’re having problems at home. Thus, the whole world suffers when a recession strikes the United States, China, or Europe.

Places like Vietnam are less exposed because they don’t have IKEA or Papa John’s yet.

Both these chains already have plans to expand into Vietnam soon though. Fast-acting investors will benefit by owning frontier market assets before such multinationals inevitably expand here.

Vietnam’s low correlation with global markets is combined with rapid population growth and surging foreign direct investment (FDI). The result is an emerging economy that has not only missed multiple recessions, but also averaged 7% growth per year.

Some people might argue that the Vietnam War is a major reason for the economy’s subsequent boom.

A situation can only get so bad before the only direction left to go is upwards. The climax of a major armed conflict is certainly one of those cases. Vietnam’s economy started from a low base and took off once the gunfire stopped.

However, war doesn’t tell the whole story about why Vietnam has skipped five recessions. You can’t really use the “reconstruction economy” as a reason for endless growth past the mid-1980s.

The fact is, Vietnam and a few other emerging markets have something their peers don’t. It’s a rare combination of business-friendly policies, political stability, a well-developed tourism sector, and a strategic location, all working together in tandem.


More Countries That Skip Recessions

Several countries in Asia have gone awhile without entering recession. Not all of them have a record lasting three decades. However, even 10 or 20 years is a long time for a non-stop economic boom.

Neighboring Cambodia also boasts a strong history of skipping recession. They haven’t had a single economic downturn since the Khmer Rouge was ousted during the 1990s.

Cambodia is further propelled by its strong demographics and pro-investment policies. Foreigners can own property and 100% of a company.

Add in a low cost of labor along with lax regulations, and it’s easy to understand why manufacturers including Nike and Samsung are setting up in Cambodia.

You can add Mongolia to the list of markets that have skipped recession too. With a population of just 3 million, it’s the world’s least densely inhabited nation. But proximity to China along with vast resource deposits will help Mongolia’s boom for years to come.

China is depleting its own mines. As such, they’re looking toward Mongolia’s ample supply of coal, uranium, oil, and other resources.

This support alone is all Mongolia needs to thrive since China’s economy is roughly 1,000 times larger and needs to import all of these.


The impressive skyline of Astana – Kazakhstan’s capital and second largest city.


Looking over toward Central Asia, Kazakhstan is another place that has grown for two decades straight. They’ve arguably fared better than anywhere else in the former Soviet Union with a GDP per capita higher than Russia’s.

Kazakhstan certainly isn’t a poor country. Like Mongolia, they’re lucky enough to have vast mineral deposits. Oil is one of Kazakhstan’s top exports and they have the world’s 12th biggest reserves.

Notice that all these countries are frontier markets. While investing in frontier markets does indeed have its risks, owning assets in developing nations will help diversify and enhance your portfolio when done correctly.

Consider shifting a reasonable part (5% to 10%) of your assets to these higher-growth, uncorrelated markets if you haven’t already.

At worst, you’ll gain a more diversified portfolio and less reliance on your home country’s financial system. In a best case scenario, it could help you avoid a future recession.


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