Findlay Nicolson economists say trade war could help Vietnam to become a developed economy as businesses seek alternatives to investing in China.
This bodes well for Vietnam’s economy which Findlay Nicolson economists expect to expand by 6.7 percent this year.
While the prolonged trade war between the US and China has had a negative impact on most Southeast Asian economies, Findlay Nicolson economists believe it may help Vietnam to emerge as a developed economy.
Although Vietnam is still heavily reliant on Chinese demand for its exports which has been waning due to the ongoing trade war, it is also benefitting from businesses less willing to invest in China.
Vietnam’s close proximity to China, combined with good labor conditions and reasonable wages are helping to drive foreign direct investment. According to the Vietnamese Ministry of Planning and Investment, FDI into Vietnam increased by almost 70 percent on a yearly basis during the period from January to May this year, the highest surge since 2015.
Findlay Nicolson economists say Vietnam’s economy is likely to continue to benefit from investment by high-value manufacturing companies wary of doing business in China while it battles with the US.
Although Vietnam faces several challenges, including low labor productivity, insufficient education and unsatisfactory institutional reform, Findlay Nicolson economists say it is on course to outdo its economic peers this year.
Vietnam’s domestic demand is expected to remain strong for the rest of this year and next and tourism will continue to grow steadily.