Vietnam’s overall trade picture slowly shifting
The exchange of goods and services with South Korea is rising fast
With total trade value reaching more than $93 billion, China is still Vietnam’s largest trading partner. However, with the current and new free-trade agreements (FTAs) in which Vietnam is participating, we are seeing markets other than the Chinese that are strongly increasing trade importance. For example, in 2017, South Korea became Vietnam’s second biggest trade partner, with total trade of $61.6 billion, a 41.3% increase compared to 2016! With such significant trade increase, South Korea overtook the US at the second place of Vietnam’s most important trade partners. Trade with Japan rose 10% in 2017, reaching $33 billion.
Total trade in 2016 (in billions of US $) [data from Vietnam General Statistics Office]
China: 72
US: 48
Korea: 43
Japan: 30
Taiwan 13
Singapore 7.5
A recent report issued by HSBC states that the shift away from China to other countries, namely South Korea and Japan, is partly due to the signing of the trade deals, such as the South Korea - Vietnam FTA (SKVFTA), and the CPTPP, where both Japan and Vietnam and participants.
Vietnam and South Korea can be especially optimistic about the trade among their countries, as they have recently pledged to boost bilateral trade to $100 billion by 2020, 50% more compared to 2017. It is important to note that upon the signing of the SKVFTA, the trade goal for 2020 was initially set to $70 billion.
Finally, HSBC’s report shows that Vietnamese companies are showing optimism about future trade. Around a third of the surveyed companies are mentioning conducive economic environment, increasing demand and labor and logistics costs as reasons for their optimistic outlook.
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