Opportunities for Vietnam amid China policy switch
Opportunities for Vietnam amid China policy switch
The easing of China's pandemic restrictions is expected not only to help Vietnam increase the number of international tourists, but also to attract investment, according to various experts.
At a talk show themed "Exploring opportunities 2023" hosted by Vietnam Investment Review on December 30, Nguyen Thanh Trung, head of the Analysis Department of Thanh Cong Securities, pointed out how China's recent moves to relax policy in terms of COVID-19 may impact the Vietnamese market.
"Chinese tourists to Vietnam are expected to increase as a driving force for GDP growth in 2023," Trung said. "Vietnam's tourism sector contributed about 10 per cent to the country's GDP in 2019, but the figure had decreased ever since, mainly caused by the lack of Chinese tourists."
Trung cited the number of tourists searching for international flights has increased recently. "Aviation is one of the first sectors that will benefit as trade and travel become easier. Logistics that support trade, and many other sectors related to China’s opening up, are also expected to benefit," he said.
However, there may also be some negative impacts on Vietnam's market as a result. Trung said the demand for goods, oil and gas in particular, is expected to increase in 2023. As China's economy picks back up, total global oil use will increase, putting upward pressure on prices.
Meanwhile, if skyrocketing inflation lasts in 2023, it will pose challenges for investment channels such as securities because rampant inflation is considered the main reason causing many central banks worldwide to have rushed to raise benchmark interest rates.
Trung also said that Vietnamese sectors that compete directly with China, such as the production of essential goods, may be negatively affected by China's reopening.
With a more optimistic view, Nguyen Tuan Anh, founder of investment consultants FinPeace, said that China possesses a huge amount of resources so the return of such a major player in the global market could help stabilise the supply and price of goods.
"Regarding inflation, Vietnam’s consumer price index will increase at the beginning of 2023, then shrink at the end of the year. Oil prices are forecasted to return to normal levels," Tuan Anh added.
