January 28th 2020
EXPORTS ARE EXPECTED TO GROW DUE TO TRADE WAR ON TARIFFS
2018 GDP had performed a little bit slower if compared to 2017 GDP, with 6,8% versus 6,5%. 2019 forecast is showing the same percentage of 2018. There are still no forecasts regarding 2020.
Vietnamese strengths consist in a development strategy based on openness, upscaling and diversification of economy, a large available labour force at low wages, a strong agricultural and natural resources.
On the other hand, Vietnam is showing shortcomings in the business climate, lack of infrastructure, incomplete reform of the public sector and a fragile banking system. Inefficient and indebted SOEs take up 28.4% of capital while representing 0.5% of total number of firms.
However, Vietnamese economy results unaffected by Chinese slowdown and is a potential benefactor of US-China trade war.
Domestic demand will be strong, supported by the tourism sector (7% of GDP in 2017), the growing middle class, increasing wages and rising urbanisation rates. Inflation is set to remain at the upper limit of the authorities’ target, partly due to higher oil prices.
Exports are expected to continue to perform strongly and their outlook is made brighter by the trade war on tariffs, which could be the start of a reshaping of global value chains.
From the political point of view, Vietnamese domestic policy will continue to target corruption and a lack of transparency to increase attractiveness for foreign investors: Vietnam is ranked 68th out 190 countries in the 2018 Doing Business ranking by the World Bank.
Vietnam is the 21st largest import economy in the world and also 21st largest export economy.
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