Vietnam’s economy could eclipse that of Singapore by 2029 as it has the potential to grow at about 6-6.5 per cent, DBS Bank has forecast.
The Vietnamese economy offers low-cost labour, an improving business climate and one of the world’s fastest growth rates.
The nominally communist state would enjoy strong foreign investment inflows and enviable productivity growth in the forthcoming years, said the Singapore-based bank said.
“If it can sustain that pace of growth, the Vietnam economy will be bigger than the size of the Singapore economy in 10 years’ time,” said DBS economist Irvin Seah.
Hanoi has forecast GDP expansion of 6.8 per cent this year while a young population, high productivity, improving infrastructure and iron-fist, one-party rule were encouraging international investment, said Seah.
Vietnam is also well-placed to prosper from the fallout from the US-China trade war, with several large Chinese employers shifting their supply chains to their southern neighbour to avoid US sanctions.
Exports of seafood to the other signatories – Australia, Brunei, Canada, Chile, Japan, Malaysia, Mexico, New Zealand, Peru and Singapore – rose 15 per cent year-on-year from January to April this year, generating US$502 million in revenue, Vietnam’s ministry of agriculture reported.
Vietnam is one of the fastest-growing Asian sources of US imports and could soon overtake the UK.
Vietnam’s US exports rose 40.2 per cent year on year in Q1 2019, according to the US Census Bureau.
US imports from China fell 13.9 per cent during the same quarter, as Donald Trump stepped up his trade war with Beijing.
If sustained throughout this year, Vietnam could overtake Italy, France, the UK and India in the list of exports to the US.
“Global investors have been lining up to be a part of the Vietnam narrative,” Seah reported. “Strong FDI from China and Hong Kong in the first four months of this year may well mark the beginning of a new trend.”
Vietnam’s regional competition have largely seen their exports to the US fall amid the ongoing dispute initiated by Trump.
Japan, South Korea, Singapore, and Taiwan all saw US export contractions last month, while Vietnam’s April exports gained 7.5 per cent from a year earlier.
The Vietnamese are associated with a legendary work ethic. Picture credit: Wikimedia