Vietnam’s economy to overtake Singapore’s in next decade: DBS Bank
If Vietnam’s economy grows by 6.5% each year over the next 10 years, it will exceed Singapore in size by 2029, according to the Nikkei Asia Review’s quoting of a DBS Bank report.
DBS senior economist Irvin Seah was quoted as saying on May 28 that fundamentals, including improvements in productivity and infrastructure amid the escalating US-China trade war, have made Vietnam a top destination for foreign direct investment, with the trend looking likely to continue.
The Vietnamese economy has the potential to keep growing at a rate between 6-6.5% in the mid-term, with 5.5% coming from productivity growth and another 1 percent in the short-term from growth in the working-age population.
As it stands currently, it is about 69% of the size of the Singaporean economy, Seah wrote.
The economy will be bigger than Singapore’s in a decade if it sustains such growth and the latter continues to grow at a matured pace of about 2.5%, he predicted.
The Vietnamese Government is making a deliberating effort to encourage investment and improve infrastructure, the report said. In addition, Vietnam’s geographical position in the regional supply chain and its extensive network of free trade agreements put the country in a favourable position to benefit from ongoing trade disputes between the US and China.
The DBS Bank report shows that China’s FDI in Vietnam was unusually strong in the first four months of 2019, outstripping all other countries to reach USD 1.3 billion and a sharp incline from from last year’s USD 200 million.
Meanwhile, Vietnamese exports to the US have also jumped as companies move production to the country to evade US tariffs on Chinese goods. The country also emerges as one of the top electronics manufacturers in the region.