Vietnam’s 2011 economic outlook
Global banking giant Citigroup has identified Vietnam as one of the 11 3G (Global Growth Generators) countries to watch.
Although overshadowed by its larger Asian neighbours China and India, Vietnam has experienced remarkable economic growth over the last decade, despite the global financial crisis and the nation’s low starting point.
Citigroup economist Willem Buiter predicts Vietnam is one of the 11 countries likely to stand out in terms of a high growth rate and investment attraction over the next 40 years, and according to the Economist Intelligence Unit, Vietnam’s economic outlook for 2011 through to 2014 is forecast to be strong.
This positive outlook can be credited to Vietnam’s four key economic strengths.
1. The robust economy
Vietnam is one of the fastest growing economies in Asia, second only to China. It recorded an average growth rate of 7.4 percent in the last decade, and is targeting an economic growth rate of 8 percent during the next five years. Vietnam’s economic exchange with the ASEAN countries, the US, Japan, Australia and Singapore has been expanding rapidly.
What’s more, the opening of the economy according to WTO commitments is in progress, and this signals exciting emerging prospects for foreign investments and expansion in this market. Prominent examples of existing successful Australian investments include ANZ Bank, Qantas, RMIT and the Commonwealth Bank.
2. Rising retail growth
Vietnam has been experiencing rapid retail growth due to improved standards of living and the growth of its middle class. With 87 million consumers and retail sales up 20 percent year on year there is an increasing demand for imported products, creating unprecedented opportunities for foreign companies to get their merchandise onto Vietnamese shelves.
Drinking imported wines, for example, is now a growing trend among urban affluent Vietnamese.
For those who have been to Ho Chi Minh or Hanoi in the past few years, you would have noticed how rapidly the country is moving towards a Western-style culture where blue jeans have replaced the ao dai, pizzas and cappuccinos are on the lunch menu and driving an Audi Q5 is de rigueur.
3. Rapid export growth
Low cost labour and high literacy in Vietnam have made the country a compelling alternative manufacturing base to China and the workforce is highly motivated, loyal and has strong work ethics. Vietnam is now a major apparel supplier to the US, just behind China in terms of market share.