31 May 2022
For the first time in three years, the Vietnamese government was able to attend the Joint Economic and Trade Committee meeting with their UK counterparts. This is the latest move to expand trade between Vietnam and the UK. At this moment in time, Vietnam is the UK's 35th largest trading partner, currently worth around £5.5 billion a year.
While it is safe to say that Covid has prompted many challenges for the Vietnamese and UK governments, they both have one thing in common. Both countries have been highly proactive concerning Covid vaccinations, which helped create a more stable economic environment. Consequently, it was no surprise to learn that trade between the two countries increased by 11% between 2020 and 2021.
This move is part of the UK government’s policy of extending trading arrangements in the APAC region, following the rollover of previous EU trade deals.
The Vietnamese and UK authorities are looking toward long-term cooperation in education, agriculture, technology andhealthcare with particular focus on renewable energy. UK trade with Vietnam is dominated by pulp and paper waste, pharmaceuticals, beverages, metal ore and the aircraft industry. While trading arrangements between both countries go back many years, with the shackles of Europe removed, there are high hopes for the future.
It is no secret that the UK authorities are looking to join the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP). Having already made formal moves, this could become a reality for the UK government by the end of 2022. The fact that the UK authorities are looking to make side trade deals with CPTPP members such as Vietnam is an exciting development.
Just recently, S&P Global Ratings affirmed the BB+ credit rating on Vietnam while releasing its latest economic forecast. The Vietnam economy is expected to grow by 6.9% during 2022 and between 6.5% and 7% from 2023 onwards. This is an increase on the latest IMF expectations that the economy would grow by just 6% in 2022.
As we touched on in a recent article, Vietnam is currently undergoing a digital revolution. While there is still much work to be done, we have seen significant progress in a relatively short space of time. Moreover, in recent months, the pro-economy nature of government policies has given investors increased confidence in the Vietnam economy as we advance.
Many will be surprised to learn that Vietnam is still officially classified as a frontier market despite recent impressive economic numbers. Looking back at the 2009 US mortgage crisis and the more recent pandemic, Vietnam was one of the few countries to maintain economic growth through these challenging times. Consequently, Vietnam is attracting significant interest from overseas investors, which is having a positive impact on the stock market.
At Global Investment Strategy HK, we have deep-seated knowledge of local frontier, emerging and developed markets. It is safe to say that interest in Vietnam has been growing for some time, with many expecting this trend to continue.Back to News