Vietnam is Asia’s rising star

By Christopher Vass, senior product manager, FTSE Russell

Amid the trade tension that has been felt globally, one star in Asia has been glowing ever brighter. Vietnam has emerged as one of the fastest growing countries in the East.

As shown in Chart 1 & 2, Vietnam’s real GDP growth was 7.1% in 2018, the highest growth rate in more than a decade and only beaten by India in the region.

Production Hub

This economic expansion is mainly driven by Vietnam’s transformation into a global manufacturing hub.

Chart 3 shows that Vietnam has surpassed many of its neighbors as a global merchandise exporter and is one of the few countries in the region that continues to grow its global market share.

None of these trends are likely to be hindered by the recent EU free trade agreement, which was signed on June 30 in Hanoi.

Export Juggernaut

Exports have continued to increase this year as Vietnam has recorded positive growth year-over-year during four out of the five months this year as seen in Chart 4.

This is makes Vietnam stand-out in the region and helps make the case that Vietnam is one of the few countries that are benefiting from the relocation of manufacturing due to the recent trade tensions.

As an example, exports to the US grew with more than 35% the first quarter of this year compared to a year earlier.

Stock Market

In chart 5, it is apparent that the Vietnam equity market suffered less during the heightened volatility in May due to the trade tensions.

The FTSE Vietnam Index managed to almost stay flat in May, in stark contrast to other Asian equity indexes that were down almost 10% over the month.

Photo Credit: guido da rozze via Flickr Creative Commons

This article first appeared on the FTSE Russell blog on July 25.

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