Processing shrimp for export (Photo: VNA)HCM City (VNS/VNA) - Vietnam is expected to continue growing itsshare of global exports despite decline amid the resurgence in the COVID-19pandemic after three months of no local transmissions, according to an HSBCreport.
“If there was a new wave of infections in Vietnam, it couldstill be relatively better off given that the situation is worse in many othermarkets and regions,” according to HSBC Global Research.
Vietnam is not alone as Hong Kong, which had also largelycontained the outbreak, has also seen a surge in cases recently, showing therisks are far from over and investors need to position themselves accordingly.
“Vietnamese authorities have done a good job in containingthe transmission by far, which increases our confidence that the country isbetter prepared to deal with any further waves.
“Vietnam is one of the best long-term growth stories in Asia.
“If Vietnam were a company, we would highlight market sharegains, a strong balance sheet, robust growth, and good management. We maintainour positive view on Vietnam.”
The pandemic and US-China trade tensions have urged companiesto diversify their supply chains. Japan recently announced a first list ofcompanies it will subsidise to relocate from China to Southeast Asia.
Some 30 companies plan to move to Southeast Asia, half ofwhich could move to Vietnam to produce medical equipment, semiconductors, phonecomponents, air conditioners, and power modules.
The report, titled Asia Frontier Insights: Reassessing themarkets: Vietnam encore, expected Vietnam’s GDP to grow by 3 percent this year,the only ASEAN country to have positive growth this year.
Despite the outbreak, most economic indicators are showingsigns of normalisation. The economy is getting back on track. Vietnam’s secondquarter GDP growth was 0.4 percent year-on-year despite lockdowns and otherimpacts of the pandemic.
Retail sales rebounded by 6.2 percent year-on-year in Junewhile industrial production grew by 7 percent.
But experts warn that the pandemic is too unpredictable andcould impact Vietnam more negatively than anticipated.
The Asian Development Bank has forecast Vietnam to grow at4.1 percent this year.
In its latest update on June 18 it said developing economiesin Asia would grow very little this year since preventive measures againstCOVID-19 have affected their economic activity while import demand has weakened.
The International Monetary Fund forecast the global economyto grow at minus 4.9 percent this year, the US at minus 8 percent and the EU atminus 10.2 percent, and China by only 1 percent.
The World Bank expects the global economy to shrink by 5.2percent, developed countries by 7 percent as domestic demand and supply, tradeand finance have been severely disrupted and emerging and developing markets by2.5 percent.
Trade pact
The EU-Vietnam Free Trade Agreement (EVFTA), which tookeffect on August 1, will reduce duties to zero percent on 71 percent of goods,rising to 99 percent in seven years. This should also be positive for Vietnam’sexporters in sectors like electronics and textiles, according to the HSBCreport.
Speaking at a recent meeting on trade cooperation with EUpartners, Deputy Minister of Industry and Trade Hoang Quoc Vuong said bilateral trade has increased fromabout 4.1 billion USD in2000 to 56.45 billion USD lastyear. Vietnamese exports to the EU were worth almost 41.5 billion USD.
With a population of more than 500 million and a combined GDPof over 15 trillion USD, or22 percent of the world’s GDP, the EU is the largest exporter and importer in theworld with annual trade of 3.8 trillion USD.
Under the EVFTA, the EU will immediately remove import dutieson 85.6 percent of tariff lines – equivalent to 70.3 percent of Vietnam’sexports.
After seven years, 99.2 percent of tariff lines, equivalentto 99.7 percent of Vietnam’s exports, will be eliminated.
Vietnam will cut 48.5 percent of tariff lines, equivalent to64.5 percent of EU exports, to zero immediately and 91.8 percent of tarifflines in seven years./.
VNA
