U.S.-China trade war likely to wipe VND6 trillion off Vietnam’s GDP
U.S.-China trade war likely to wipe VND6 trillion off Vietnam’s GDP
Vietnam may see its gross domestic product (GDP) drop by VND6 trillion (US$256.6 million) in the next five years as a result of the U.S.-China trade war, said Deputy Prime Minister Pham Binh Minh.
Trade tensions between the world’s two largest economies are escalating as the United States has threatened a further round of tariffs on US$300 billion worth of Chinese goods.
At a question-and-answer session at the National Assembly’s (NA’s) seventh sitting today, June 6, NA deputies expressed their concern over the impact of the trade friction on Vietnam’s economy, especially given the surge in foreign direct investment inflows in recent months.
Deputies also wanted to know the Government’s solutions for managing foreign capital.
Deputy Nguyen Anh Tri from Hanoi asked Deputy PM Minh to present Vietnam’s response to the impact of the trade war.
In response, Minh said that the U.S.-China trade war is an issue of concern for the world, including Vietnam. The managing director of the International Monetary Fund had earlier said that the trade war was one of the four main factors affecting the global economy, Minh noted.
According to international financial institutions, if the trade war continues, the world’s economic growth would slow from 3.5% to 3.2%.
Thus, Vietnam, an economy with import-export revenue doubling its GDP, has definitely been affected by the trade war, Minh said.
Regarding the country’s preparations for cushioning the impact of the trade war, the deputy prime minister said that as soon as the trade war exploded last year, the Government had established a steering committee to evaluate the developments of the trade war and formulate relevant policies.
In the short term, the trade war would boost the export of some products made in Vietnam. However, it may cause the country’s GDP to fall by 0.2%-0.3%, Minh warned, adding that the Government had prepared measures to ensure the stable development of the local economy.
The country will continue stabilizing its macroeconomy, controlling inflation and ensuring the flexibility of the exchange rate. In addition, the competitiveness of domestic enterprises and the investment environment will be improved.
As for the FDI inflows into the country, Minh said that the Government will prioritize hi-tech projects that are environmentally-friendly. Meanwhile, the competent agencies must take steps to prevent goods from other markets being shipped to Vietnam for re-export to enjoy lower tariffs in importing countries.
According to the General Statistics Office, as of May 20, Vietnam had attracted more than 1,360 projects with total registered capital of US$6.46 billion, up 38.7% year-on-year.
If the capital added to operational projects is included, the total FDI approvals in Vietnam during the period will be nearly US$9.09 billion, up over 27% over the year-ago period.
Exports to Canada soar 70% after CPTPP takes effect
Five months after the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) came into force in Vietnam, the country’s exports to Canada have rocketed 70% over the same period last year, said Deputy PM Pham Binh Minh.
The country’s exports to Mexico and Japan, two other CPTPP members, also increased but at lower rates of 8% and 4%.
Minh said that the trade pact has benefited the country.
For example, Peru has committed to reducing 32% of its import tariff lines for wood and wooden products from Vietnam based on a five-year plan. Also, the products will be entitled to a tax reduction by 50% in Mexico based on a 10-year plan, according to a report by the Ministry of Agriculture and Rural Development.
However, the CPTPP has also posed multiple challenges for the Vietnamese economy, he said.
Specifically, enterprises in sectors where Vietnam has strengths, such as textiles and garments, must meet requirements for product traceability to be entitled to tariff exemptions and reductions by CPTPP partners.
The country must deal with the influx of goods from other countries attempting to benefit from the trade pact.
Moreover, under the CPTPP, enterprises can file lawsuits against government in cases of trade disputes. Therefore, the country must fulfill its commitments to the pact to prevent FDI enterprises’ possible lawsuits.
As many as 21 ministries and 54 localities have issued their plans to execute the CPTPP. Further, the Government is building eight laws, as committed to the CPTPP, and four decrees regulating the deployment of some articles of the Laws on Competition, Intellectual Property, Foreign Trade Management and Food Safety.
