Vietnam weathers global downturn well: HSBC

HSBC noted that the country’s export earnings in US dollars grew by 20 per cent, driven by telecoms, plastics, clothing and apparels.

The report said the country’s GDP growth of 5 percent a year remains sustainable in the medium term as the growing domestic market boosts FDI, as tourism and agricultural exports help finance industrial upgrading, and as new power plants end the perennial energy shortages.

It added that a widening range of industrial exports, higher reserves and a larger home market may reduce the volatility of growth.

According to the bank, by 2030, China will have overtaken the US as Vietnam’s largest trading partner. Exports to Asia (excluding Japan) are forecast to grow by more than 15 per cent a year out to 2020.

However, the US and Japan will remain the key sources of demand for Vietnam and together with China will be the country’s top three export markets in 2030.

Bangladesh, India, Indonesia and Malaysia will also be fast growing export partners for Vietnam.

Plans to expand the ASEAN Free Trade Agreement to zero tariffs on all goods by 2015 will be an additional factor supporting Vietnam’s trade with other economies in the region over the medium term.

Vietnam’s exports are largely weighted towards clothing and apparel, textiles and wood manufactures and telecoms equipment and these are key sectors which the advanced economies tend to need to import in quantity.

Vietnam is well located to take advantage of emerging Asia’s undisputed status as the most dynamic trading region in the world. China, India, Malaysia, Indonesia, Bangladesh and the Republic of Korea will all be among the ten fastest growing export routes over the next twenty years.

Export growth to Europe (excluding Russia) is expected to average almost 10 percent a year from 2013 to 2020. Export growth to Australia, New Zealand and Oceania will pick up sharply in the longer term and will average 10 percent from 2016 to 2020.

Exports to Latin America will grow by an average of more than 10 percent from 2013-20, with trade routes to Brazil proving particularly dynamic.

Jasmine Lau, an HSBC executive, praised Vietnam’s efforts in containing inflation, stabilising the exchange rate, and settling bad debts.

She said Vietnam is a potential market and one of the bank’s priorities in its business strategy.