HSBC: Vietnam expects positive global export prospect
|Vietnam's crude oil exports to China higher in June despite a decrease in total|
|Vietnam’s agricultural exports in July reaches USD 3.4 billion|
|Over 20,000 export enterprises are ready for EVFTA opportunities|
|Vietnam's GDP is expected to grow positively this year (Photo: VOV)|
"If there was a new wave of infections in Vietnam, it could still be relatively better off given that the situation is worse in many other markets and regions", according to HSBC Global Research.
"Vietnamese authorities have done a good job in containing the transmission by far, which increases our confidence that the country is better 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 share gains, a strong balance sheet, robust growth, and good management. We maintain our positive view on Vietnam.”
The pandemic and US-China trade tensions have urged companies to diversify their supply chains. Japan recently announced a first list of firms it will subsidize to relocate from China to Southeast Asia, according to VOV.
There are some 30 firms which plan to relocate to Southeast Asia, half of which could move to Vietnam to manufacture medical equipment, semiconductors, phone components, air conditioners, and power modules.
|Vietnamese economy is getting back on track (Photo: Industry and Trade News)|
Despite the outbreak, most economic indicators are showing signs of normalization. The economy is getting back on track. Vietnam's second quarter GDP growth was 0.4% year-on-year despite lockdowns and other impacts of the pandemic.
Retail sales rebounded by 6.2% year-on-year in June while industrial production grew by 7%. But experts warn that the pandemic is too unpredictable and could impact Vietnam more negatively than anticipated.
HSBC forecasts that Vietnam's economy will grow 3% in 2020 - the only ASEAN country to grow positively and rise to 8.5% in 2021. HSBC also argued that Vietnam is no longer just a success story of outsourcing supply chains but is becoming a truly attractive destination.
HSBC believes that despite Covid-19, the situation in Vietnam can still be considered relatively good compared to many other markets and regions. In addition, HSBC believes that Vietnam will continue to gain market share in global trade, even as the size of global exports decreases, reported by CafeF.
|HSBC argued that Vietnam is becoming a truly attractive destination (Photo: Nhan Dan)|
The International Monetary Fund forecast the global economy to grow minus 4.9% this year, the US at minus 8% and the EU at minus 10.2%, and China by only 1%. The World Bank expects the global economy to shrink by 5.2%, developed countries by 7% as domestic demand and supply, trade and finance have been severely disrupted by 2.5%.
The EU-Vietnam Free Trade Agreement (EVFTA) which took effect on August 1, will reduce duties to 0% on 71% of goods, rising to 99% in seven years. This should also be positive for Vietnam’s exporters in sectors like electronics and textiles, according to the HSBC report.
Deputy Minister of Industry and Trade Hoang Quoc Vuong said bilateral trade has increased from about US$4.1 billion in 2000 to US$56.45 billion last year. Vietnamese exports to the EU were worth almost US$41.5 billion.
The EU is the largest exporter and importer in the world with annual trade of US$3.8 trillion. Under the EVFTA, the EU will immediately remove import duties on 85.6% of tariff lines – equivalent to 70.3% of Vietnam’s exports. After seven years, 99.2% of tariff lines, equivalent to 99.7% of Vietnam’s exports, will be eliminated. Vietnam will cut 48.5% of tariff lines, equivalent to 64.5% of EU exports, to zero immediately and 91.8% of tariff lines in seven years.
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