During a pre-conference information session for the upcoming UOB regional conference titled “Gateway to ASEAN” in Ho Chi Minh City on September 6, Mr. Suan Teck Kin, Head of Research at UOB, highlighted the region’s economic and trade potential, with Vietnam being a key destination with promising prospects.
ASEAN’s Resilience and Growth
Despite volatile markets and global uncertainty, ASEAN has demonstrated resilience in the face of economic challenges. While the world faced recession risks, ASEAN maintained robust growth and kept inflation significantly lower than G3 economies. The Asian Development Bank (ADB) forecasts a healthy 5% growth for ASEAN in 2024, a level it has sustained over the past decade, despite macro-economic headwinds.
ASEAN’s rise is driven by several factors, including its favorable demographics with a large and growing young population of nearly 700 million and an expanding middle class. Additionally, its strategic geographical location at the crossroads of major trade routes contributes to its success, facilitating $3.4 trillion in global trade annually.
Mr. Suan noted, “In terms of trade, ASEAN is a major player, but much of its trade occurs outside the region. In 2022, ASEAN’s trade reached $3.8 trillion, 80% of which was with non-ASEAN countries. This contrasts with the EU, which has a higher intra-bloc trade share of 80%, indicating that ASEAN is highly integrated into global trade, particularly with economic powerhouses like China and the US.”
The shift in US trade flows has benefited ASEAN. Imports from China to the US have decreased, while imports from ASEAN have risen, with Vietnam witnessing significant growth in its share of US imports.
Additionally, China’s trade flow diversion from the US and Europe has further bolstered ASEAN’s position. ASEAN has become China’s largest trading partner, surpassing the EU and the US. This shift reflects a growing economic alignment between China and Southeast Asia.
These trends underscore a significant restructuring of global trade, with ASEAN taking center stage in supply chains due to its reduced reliance on China and increasing regional and global integration.
Vietnam: Shining Bright in ASEAN
Vietnam is a “Bright Star” in the ASEAN bloc, maintaining impressive economic growth rates over the years despite global fluctuations. Its economy has proven resilient, with positive growth expected in 2024, along with increasing FDI and a record trade surplus contributing to economic stability.
According to the General Statistics Office, Vietnam’s GDP growth in the second quarter of 2024 exceeded expectations, reaching 6.93%. This surpasses the forecast for the full year 2024, expected at 6%, and marks an improvement over the previous quarters.
Vietnam’s overall economic growth is bolstered by robust manufacturing activity and the trade sector’s recovery. The manufacturing and service sectors have exhibited strong growth in the past two quarters, accounting for three-quarters of the country’s GDP. Additionally, foreign trade remained robust in the first half of 2024, with semiconductor sales momentum expected to continue.
FDI into Vietnam has been impressive, reaching record highs for two consecutive years. Mr. Suan attributed this to the “continued confidence of investors and businesses in Vietnam’s competitiveness and potential.” Despite remaining risks, international institutions like UOB, ADB, IMF, and WB forecast positive growth for Vietnam, making it one of the fastest-growing economies in ASEAN.
Vietnam’s long-term economic growth is supported by positive demographic and macro-economic trends. Its strong and expanding middle class, along with its position as the third-largest population in ASEAN with about 100 million people, set the stage for increased consumer spending in the coming years.
In terms of macro-economic trends, Vietnam is successfully transitioning from lower-cost manufacturing to higher value-added technologies and services, with a growing focus on the services, retail, and tourism industries. As a result, Vietnam’s economic share of ASEAN’s total GDP has almost doubled since 2000, reflecting its rising economic stature.
To delve deeper into growth and investment opportunities in ASEAN and Vietnam, UOB will host the annual “Gateway to ASEAN” conference on September 6 at the Thisky Hall Sala Convention Center in Ho Chi Minh City. This year’s theme, “ASEAN: Crossroad to The World,” underscores the region’s strategic position in global trade. The conference will bring together leaders from Vietnamese ministries and agencies and prominent regional enterprises.
As a bank with the most extensive trade network in ASEAN, UOB is dedicated to fostering sustainable development in the region. Through its regional network and local expertise, UOB is committed to offering comprehensive financial solutions to help businesses capitalize on growth opportunities in this dynamic economic landscape.
The conference will be livestreamed on VnEconomy’s official Facebook page on September 6 at 9:15 am. For more details, visit: https://events.searix.net/uobgta/.
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