Analysts have been keeping an eye on Southeast Asia, especially with the growing tensions from the trade war between the US and China. Vietnam in particular is slowly becoming a popular location for manufacturing due to it’s relatively low operation costs.
As such, U.S. imports from Vietnam grew sharply in the first quarter of 2019 as businesses shifted their supply chains. In the first three months of 2019, American imports from Vietnam saw a rise of 40.2 per cent, compared to the previous year. This puts Vietnam in a position to possibly overtake the UK as the 7th largest supplier of US imports.
On the other hand, declining trade relations between US and China has resulted in a decline of 13.9 per cent of imports from China to the US.
As more businesses move out of China into countries such as Vietnam; and more and more nations are looking to Vietnam as an alternative source of imports, it is relatively unsurprisingly that analysts are speculating that Vietnam’s economy could be bigger than Singapore’s by 2029. Areas such as Can Tho city in Vietnam have seen impressive economic growth rates over the past few years and is a prime location for the expansion of agriculture and industry.
DBS Bank Ltd. In particular has forecast Vietnam’s potential to grow at a pace of about 6 – 6.5 per cent over the next decade, citing strong foreign investment inflow and productivity growth in the coming years.
“If it can sustain that pace of growth, the Vietnam economy will be bigger than the size of the Singapore economy in ten years’ time”, said Singapore-based economist Irvin Seah in a research note.
This would be no easy task as Singapore has recently reclaimed the top spot as the world’s most competitive market; according to the annual rankings released by Swedish-based IMD Business School.