Total trade is expected to rise by around 187 percent over the next fifteen years, close to double the average increase in global trade during the same period, said HSBC’s Global Connections Report.
Vietnam’s Compound Annual Growth Rate (CAGR), an average growth rate over a certain period, is expected to be 8.2 percent over the next five years and maintain a similar pace to 2021 before slowing down like its Asian peers to around 5.3 percent in 2022-2026.
Vietnamese companies are forecast to increase trade activity by 7.3 percent annually over this period, said the report.
Vietnamese traders have been recorded to have consistent levels of positive sentiment with an average HSBC Trade Confidence Index (TCI) of 115, a relatively high level.
Indexed scores of 116, 115 and 115 have been recorded since H1/2011.
Despite an 8 percent contraction since H2/2011, 80 percent of respondents still expect to see trade volumes remain stable or grow in the next six months.
The survey shows that in the near term, intra-regional trade will remain critical for Vietnamese businesses now, and over the next six months with Singapore topping three regional trade partners including Greater China, Southeast Asia and the rest of Asia.
Trade amongst the major trading partners for Vietnam is expected to remain strong, with the exception of Australia, where falling exports of crude petroleum are expected to weigh trade down.
Developed world - dominant partners
China, the US, Japan and Germany will be the dominant trading partners during the mentioned time period.
The US is by far the largest export destination for Vietnam, roughly twice as big as Japan, the next largest, with strong growth of exports of 6.6 percent led by furniture, clothing and footwear over the next five years.
Japan is also expected to see growth of around 6 percent, with exports of wire and cable the top sector by volume.
China is also a key trade corridor for Vietnam, with strong export growth of 10.2 percent forecast out to 2016, and import growth of 10.4 percent over the same period. Coal is the top export here.
German exports are led by footwear and coffee, and again growth is expected to be strong, at over 7 percent.
The biggest export sector for Vietnam is crude oil, which is expected to be weak over the next five years, with a modest decline projected.
Then comes footwear, which is expected to see reasonable growth of around 3.2 percent, with the US and Germany the key markets.
Furniture is the third largest export sector and is expected to see strong growth of around 6.3 percent, led by the US where growth is expected to top 7 percent.
Coffee is another fast growing sector with exports expected to rise by more than 6 percent.
Neighboring countries – main import corridors
The main import partners come from the region, led by China with growth of 10.4 percent.
Import-wise non-crude oil is the biggest sector and is expected to continue to grow robustly at close to 4.5 percent, with Singapore, South Korea and China standing as the three biggest suppliers.
The second largest sector is hot rolled iron and steel, with growth of 8.7 percent expected, where China, South Korea and Japan are again the major partners.
Telecom equipment and knit fabric are the next two biggest import sectors, with growth expected to be around 12.9 percent and 9 percent respectively.
Korea, Singapore and Japan come after China next with projected growth of 8.8 percent, 5.7 percent and 7.6 percent respectively.
“This extensive report–commissioned by HSBC and undertaken by Delta Economics–shows that intra-regional trade will remain critical for Vietnamese businesses in the short-term period,” said Huynh Buu Quang, Head of Commercial Banking HSBC Bank (Vietnam) Ltd.
“Meanwhile Vietnam’s major export partners are the main trading nations of the world–namely, the US, Japan, China and Germany–so we trust export growth will remain strong.”
Delta Economics is a leading research-led economics consultancy founded in 2006 by Dr Rebecca Harding, a trade economist. Delta specializes in economic growth and trade modeling/forecasting.
Globally, the fastest growing export market is expected to be Switzerland, with growth of some 17 percent, followed by India and Brazil at 14.5 percent and 14 percent respectively.
Exports to Turkey, Hong Kong and South Korea are all expected to grow more than 11 percent over the next five years. Norway is expected to lead import growth at over 15 percent.
Brazil also shows up near the top of the import growth list at 11.5 percent, as do Turkey and India, both of which are above 10 percent.
Audio-Visual parts and equipment are also projected to be strong at 16.6 percent and 14.4 percent.
Telecom equipment is expected to see buoyant export and import growth at 15.9 percent and 12.9 percent respectively. Iron and steel tops import growth at 13.5 percent, with cotton and aircraft also expected to be strong at better than 12.5 percent.