Vietnam to See Strong Trade Growth through 2030
HCMC – Vietnam’s strategic geographic location, low wages, and beneficial trade deals are set to make the country an increasingly important export destination both in Asia and throughout the world. In a recent report released by the bank HSBC, it has been revealed that Vietnam will see strong export growth through the year 2030.
The HSBC report has highlighted a number of important areas that point to a rosy export future for Vietnam. Chief among these is the country’s close location to some of the fastest growing economies in Asia, such as China, India, and Malaysia. These three countries will be Vietnam’s fastest growing export destinations, at a rate of at least 14 percent per year, through the year 2030. In fact, China is expected to overtake the United States as Vietnam’s largest export destination by 2030.
An additional reason for the optimism about Vietnam is the Trans-Pacific Partnership (TPP), a US-led trade agreement involving 12 countries. Upon completion, the TPP trade area would comprise a region with US$28 trillion in economic output, making up around 39 percent of the world’s total output. Once implemented, tariffs will be removed on almost US$2 trillion in goods and services exchanged between the signatory countries. Thus, Vietnam has much to gain from the implementation of the trade agreement, including drastically reduced tariffs in some of the world’s largest markets.
Additional trade deals with the EU and other countries, as well as further ASEAN integration, are also set to help boost Vietnam’s economy. As a result of this plethora of trade deals, HSBC confidently predicts a GDP growth rate of more than five percent per year through 2030 for Vietnam.
However, HSBC has also highlighted potential risks to Vietnam’s growth, these include possible resistance from the country’s ruling party to structural reforms, setbacks to infrastructure investment, delays to the free trade deals, and possible slower growth in China.
HSBC expects that clothing and apparel will also continue to be among the main drivers of Vietnam’s growth – contributing almost 20 percent of the projected export growth through 2030. However, with the large investments by companies such as Samsung, Vietnam has also become an attractive location for the telecommunications industry – HSBC believes that this will put the country in a prime position to meet increasing demand for consumer goods in Asia.
According to HSBC’s predictions, China and South Korea will remain Vietnam’s largest import partners. Industrial machinery will continue to be Vietnam’s largest import sector through 2030 and will contribute around 25 percent of the country’s import growth. Textiles and wood manufactures will be the next largest import sectors, followed by information and communication technology (ICT) equipment.
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