Vietnam is capitalising on the problems affecting the supply chains as more and more manufacturers move to the Southeast Asian country. This year the Vietnamese economy is expected to grow at around 6.7 per cent. Foreign investment is up by 81 per cent. Multinationals are moving to Vietnam from China.
Hanoi (AsiaNews) – Vietnam is the big winner in trade war between the United States and China. According to economists, this year the country’s economy will grow at a faster pace than all other Southeast Asian economies.
Thanks to trade tensions between the world’s two largest economies, the Vietnamese government has been able to capitalise on the problems affecting supply chains as more and more manufacturers move to Vietnam to avoid high tariffs.
At the same time, foreign direct investment (FDI) and the manufacturing sector remain two important drivers in the country's economic growth.
The Vietnamese economy is expected to grow at around 6.7 per cent this year, the fastest rate in Southeast Asia, this according to the Institute of Chartered Accountants in England and Wales’ recent Economic Insight: South East Asia Report.
The latter notes that all Southeast Asian economies have seen exports drop in the second quarter of this year compared to the same period last year, except for Vietnam’s whose exports grew albeit at a slower pace than last year.
In the first quarter, the Vietnamese economy grew at 6.8 per cent year-on-year driven by strong manufacturing, steady services and higher agricultural output.
According to the Foreign Investment Agency, FDI in the first two months of this year increased by 9.8 per cent year-on-year to around US$ 2.6 billion with manufacturing getting the most attention.
Vietnam’s close proximity to China and favourable labour conditions, including affordable wages, will ensure that FDI remains strong in the medium term. Meanwhile, companies operating in China now find themselves in difficulty due to US duties.
For this reason, various multinational corporations have shifted production to Vietnam, including Chinese companies that bring products to the country that are then labelled ‘Made in Vietnam’.
Foreign capital invested into labour-intensive manufacturing industry has boomed last year. Newly registered investments in the country are up by 81 per cent, and capital contributions, used to fund new facilities, are up by 215 per cent, this according to government data from April.
In the first four months of 2019, Chinese investment into Vietnam has already reached about 65% of the total for 2018. But closer trading ties between the two countries are a source of concern for many Vietnamese and are fuelling growing popular opposition to China’s expansionism, both economic and otherwise.