Vietnam most vulnerable in ASEAN to US-China trade war
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Vietnam will be the most vulnerable country in Southeast Asia should the U.S.-China trade war persist, according to recent research.
This is because Vietnam is the most export-dependent of the ASEAN big five, which also includes Indonesia, Malaysia, the Philippines, and Thailand, quoted from Financial Times Confidential Research report.
Vietnam’s exports were worth $214 billion last year, 21 percent up from 2016, according to Vietnam’s Customs. The U.S. was the largest importer of Vietnamese goods last year, buying goods worth over $41.6 billion.
“Vietnam’s exports to the U.S. rank first among the ASEAN five, making the country sensitive to softening U.S. consumer demand,” the report said.
Another reason that Vietnam and other ASEAN member countries would be impacted by the escalating trade tension is the strengthening of the U.S. dollar, it said.
The dong has been devalued by 1.5 percent this year, and the government could take more aggressive action if exports slow significantly, it said.
But Vietnam, Thailand and Malaysia might still benefit from the currency weakness “if foreign direct investment shifts away from China as more companies hedge against the risk of trade action,” it added.
Trade tension between the U.S. and China continues to escalate. A Reuters report cited Beijing as saying last week that it would slap additional tariffs of 25 percent on $16 billion worth of U.S. imports.
The announcement came after Washington said it would impose 25 percent tariffs on another $16 billion in Chinese goods after imposing tariffs on $34 billion last month.
So far, China has now either imposed or proposed tariffs on $110 billion of U.S. goods, representing the vast majority of its annual imports of American products.
Vietnamese experts too have cautioned that the country would suffer collateral damage because of this trade war.
A report released last week by the Ministry of Planning and Investment’s National Centre for Socio-Economic Information and Forecast said Vietnam’s GDP growth would take a hit from the trade tension.
The report predicts a drop of 0.03 percent this year, 0.09 percent next year and 0.12 percent in 2020 and 2021.
In money terms, it translates into VND8 trillion ($344 million) in 2021.
Questions & Answers
Q.Why is Vietnam considered the most vulnerable country in Southeast Asia to the US-China trade war?
Why is Vietnam considered the most vulnerable country in Southeast Asia to the US-China trade war?
Vietnam is the most export-dependent of the ASEAN big five, with the U.S. Being its largest importer. This makes the country sensitive to any softening of U.S. Consumer demand, increasing its vulnerability should the trade war persist.
Q.Which other ASEAN countries are part of the 'big five' mentioned in the research report?
Which other ASEAN countries are part of the 'big five' mentioned in the research report?
The Financial Times Confidential Research report identifies the other countries in the ASEAN big five as Indonesia, Malaysia, the Philippines, and Thailand. Vietnam is also included in this group.
Q.How much has Vietnam's currency been devalued this year, and what could the government do if exports slow further?
How much has Vietnam's currency been devalued this year, and what could the government do if exports slow further?
The dong has been devalued by 1.5 percent this year. If exports slow significantly, the government could take more aggressive action, though the article does not specify what that action might be.
Q.What impact do Vietnamese experts predict the trade tension will have on the country's GDP growth?
What impact do Vietnamese experts predict the trade tension will have on the country's GDP growth?
Vietnamese experts predict a drop in GDP growth of 0.03 percent this year, 0.09 percent next year, and 0.12 percent in both 2020 and 2021. This translates to VND8 trillion in 2021.