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German businesses upbeat on Vietnam

Released at: 10:03, 14/11/2018

German businesses upbeat on Vietnam

Photo: GIC/AHK Vietnam

Business Confidence Index of German businesses in Vietnam fairly positive.

by Hong Nhung

The Business Confidence Index (BCI) of German firms in Vietnam has remained positive, according to German Industry and Commerce (GIC/AHK) Vietnam.

In the 12 months ahead, 54 per cent of German firms intend to continue investing in Vietnam and 52 per cent plan to hire more employees. Further on, 44 per cent still consider economic policy framework conditions and the lack of skilled workers as the greatest uncertainties for their business.

“Economic growth in Vietnam is continuing,” said Mr. Marko Walde, Chief Representative of GIC/AHK Vietnam. “The conclusion of the free trade agreement with the EU will induce an additional boost for the country’s economic development in the medium-term.”

“In addition to Singapore, the signing of the free trade agreement between the EU and ASEAN indicates a strong signal for rules-based trade and against import restrictions. Vietnam is not only an important trade partner of the EU but also of Germany within ASEAN. Additionally, Vietnam is also a shelter for increasing tariffs, which have arisen because of the trade conflict between Washington and Beijing concerning goods produced in China.”

The annual survey rests on a regular survey of business members of the German Foreign Chamber of Commerce, Delegations and Representatives (of the AHK) globally. The survey obtains worldwide feedback from over 3,500 German businesses, branches and subsidiaries, as well as businesses with close connections to Germany. The survey was conducted in September and October.

The Asia-Pacific economy is developing very well, according to the GIC/AHK report. Still, there is a more subdued mood among companies compared to spring this year. According to businesses, the Asian economic motor is going to take things more slowly. Increased key interest rates in the US plus the US-China trade conflict negatively affect the economic climate in the region.

Global trade and the global economy have come under pressure. Global economic development was significantly slower than expected. Compared to the last survey, the confidence indicator in global economic development has weakened.

The report also noted key risks for economic development in the upcoming 12 months: economic policy framework conditions (50 per cent), domestic demand (37 per cent), and the exchange rate (33 per cent). Particularly in the US, nearly every second company considers trade barriers (49 per cent) as a risk factor.

There are also challenges for global trade. Although growth of 4.9 per cent was expected at the beginning of the year, the forecast is now only 4 per cent and significantly below the long-standing average (over 20 years) of 5.1 per cent. In addition, there are hardly any signs of easing in the following year, with an increase of 3.7 per cent globally assumed.

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