Viet Nam - bright star in the ASEAN economy: Expert

This is the opinion of the Head of Market Strategy, Global Market and Economic Research, UOB Bank (Singapore), Heng Koon How.

Viet Nam's economic share in ASEAN's total GDP has grown enormously over the years, doubling from less than 6 percent in 2000 to around 12 percent currently.

In the first half of 2024, Viet Nam has seen a substantial recovery with GDP growth in the second quarter of 2024 rising to 6.9 percent year-on-year from 5.8 percent in the first quarter of 2024.

Overall economic growth is supported by vigorous manufacturing activity as well as a recovery in the trade sector. Both the manufacturing and service sectors have grown strongly in the past two quarters.

Additionally, foreign trade activities will maintain a strong recovery in the first half of 2024, and the upward momentum in semiconductor industry sales since mid-2023 is likely to continue in the second half of 2024.

Heng forecasts positive growth for Viet Nam at 6.0 percent for FY2024, recovering from 5.0 percent in FY2023.

This will make Viet Nam one of the fastest-growing economies in ASEAN.

Over the long term, favorable macroeconomic and demographic trends support Viet Nam's strong economic growth. This has helped Viet Nam become the rising economic star of ASEAN.

Regarding demographics, Viet Nam has a growing middle class and the third largest population in ASEAN at around 100 million.

This creates favorable conditions for Viet Nam in the coming years to encourage more consumer spending as the population grows and becomes more affluent.

Regarding macroeconomic trends, Viet Nam is gradually and successfully transitioning from a low-cost manufacturing economy to a technology-driven economy with higher value-added and a strong focus on services, retail and tourism.

Besides, Viet Nam has benefited from strong growth in trade and Foreign Direct Investment (FDI) across ASEAN thanks to its position as a critical member of ASEAN.

In the context of increasing global trade conflicts and rising tariffs, ASEAN is differentiated by its strong and growing regional trade opportunities.

Specifically, ASEAN's huge trade advantage is supported by six long-standing FTAs between ASEAN and China, Hong Kong, Japan, Korea, India and Australia/New Zealand.

More importantly, the 10 ASEAN countries are pivotal in the 15-country Regional Comprehensive Economic Partnership (RCEP).

ASEAN can be seen as the "beating heart" of RCEP, supporting trade in North Asia from China, Japan and Korea, along with trade from Australia and New Zealand.