PricewaterhouseCoopers have announced that they believe Vietnam will be one of the worlds fastest growing economies until 2050. The news comes at a time where China's growth is slowing and production there is becoming more expensive. Some firms like Samsung and Intel are investing plenty of money because of cheaper production costs. It is estimated that GDP will grow in Vietnam for years to come.
However, there are some issues. Banks in Vietnam are not the best and some could fail. The work being provided is very labor intensive and does not require much education. While it will be better for the people of Vietnam, it is not fully a step in the right direction. The government needs to make sure it takes all the right steps to ensure that its country takes advantage of these growth opportunities to give its citizens a better life. Interesting read.
http://www.bloomberg.com/news/articles/2015-03-22/asia-s-about-to-spawn-a-new-tiger-economy-good-morning-vietnam
5 comments:
The article mentions several times how Vietnam is outperforming Thailand, a once promising Asian economy. It also mentions how companies are now moving to Vietnam, from China due to its rising wages.
Vietnam's move from agricultural to industrial sector and its young population has led to an increase in FDI and manufacturing plants.
Do you think Vietnam will become the new China?
While the economy in Vietnam is shifting from agriculture to manufacturing, it is mainly due to foreign investment. It might in future become heavily dependent on these companies, and if these companies withdraw it could hurt Vietnamese economy.
Moreover, the article talks about labor intensive jobs being transferred in Vietnam because labor is cheap. However, this also signals the formation of labor unions that may start demanding higher wages. This could again affect the economy as it may not have the low cost labor advantage in future. But in the short run, with the correct institutions, the economy will definitely benefit.
I think Vietnam possibly has a very positive future. More and more, Vietnamese students are filling up classrooms in top notch colleges around the world, and most of these students will go back to their country and become professionals there. The experience and education will help them build great companies, driving infrastructure forward.
This is interesting to see how more and more corporations are investing in foreign operations outside of China. This is a good opportunity for Vietnam to grow rapidly. The government needs to make sure the take all the correct steps to make sure the economy and country can achieve optimal growth. It will be interesting to see if other major corporations make the transition from countries like China to Vietnam.
I agree with Garima in that Vietnam is over reliant on foreign investment and if this investment for some reason declines or disappears then Vietnam might be badly affected.
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