VietNamNet Bridge – Global market volatility in recent months has unnerved Vietnamese traders, with 61% citing global economic crisis as a worry over the next six months, according to a recent survey of HSBC Bank.

According to its latest Trade Forecast Report, HSBC said Vietnam’s trade confidence score rose to 127 in the second half of 2015 from 120 twelve months ago, standing out compared to a sharp fall in Malaysia’s score over the same period and no improvement from Indonesia.

Almost 57% of those surveyed think trade volumes will increase over the next six months, but this is lower than six months ago with 66%, reflecting the slightly weaker outlook for world trade. However, the number expecting trade volume to be little changed doubled over the same period, suggesting the greater macroeconomic stability Vietnam has achieved is being recognized.

In addition, imminent monetary tightening in the U.S. is weighing on the outlook for world trade and more than a third of those surveyed cited higher rates as a possible barrier to trade over the next six months.

In this more challenging environment, more than half cited stronger competition as a concern. But 37% see a weaker dong having a favorable impact with only 11% expecting it to be a drag.

The report said 61% cited global economic crisis as a worry over the next six months, up from less than 40% six months ago. Almost 75% also worry about emerging competitors who compete solely on price, up from 56% previously.

More positively though, the number of traders surveyed who expect higher profit margins, favorable government regulation and more employees with the right skill set to positively impact their business rose notably compared to six months ago.

Despite greater pessimism on China, with 9% seeing it as the best opportunity for global business growth, down from 16% previously, traders remain positive about Asia, with 70% seeing it as the key region to do business with. Elsewhere, U.S. demand is growing steadily and reflecting this, the number of traders citing North America as a key region to trade with doubled.

Regarding the long-term outlook, HSBC expected Vietnam’s exports to grow by 10.1% from 2021 to 2030, little changed from 2015-2020.

Foreign direct investment (FDI) inflows have been strong in recent years, helping Vietnam diversify its export base and gradually move into higher value sectors, most notably ICT equipment which now accounts for around 25% of its exports, up from less than 10% five years ago.

Rapid trade liberalization should provide great benefits to Vietnam’s trade with the rest of Asia, the U.S. and Europe and underpin expansion into new markets. Vietnam is one of the twelve countries in the Trans Pacific Partnership (TPP), which reached a preliminary agreement in October.

Vietnam and the European Union (EU) have inked a statement on the official conclusion of a bilateral free trade agreement (FTA). It is also speeding up preparations for the launch of the ASEAN Economic Community (AEC) on January 1, 2016.

Vietnam ranks 76th in the world for its infrastructure according to the latest World Economic Forum Global Competitiveness report, behind China, Indonesia and Thailand. Reflecting the substantial infrastructure needs, HSBC expected industrial machinery to contribute around a quarter of the increase in imports from 2021-2030, little changed from 2015-2020.

China is Vietnam’s biggest import partner amongst the 24 trade partners in the HSBC Trade Forecast and with imports from China growing by 15% from 2021-2030, it will still be in 2030. Korea will continue to be Vietnam’s second largest import partner over the forecast period, it predicted.

SGT