Trade turns growth engine for globalizing Vietnam

By Dat Nguyen   October 6, 2018 | 08:30 pm PT
Trade turns growth engine for globalizing Vietnam
A man works at a mechanical factory in Hanoi. Photo by Reuters/Kham
Vietnam’s trade as a percentage of GDP topped 200 percent last year, highest for any country with over 50 million people.

This data, compiled by the World Bank, shows that the country is reaping the benefits of an open economy at a time that protectionism is on the rise, as can be seen by the U.K’s exit from the E.U. and the rising trade tensions between the U.S. and China. 

The figure of trade as a percentage of GDP is calculated by dividing the value of exports and imports by GDP, and the proportion of Vietnam is higher than that of China, Germany, Japan, the Philippines, Thailand and the U.S.

From 2011 to 2016, world’s trade as a percentage of GDP went down from 60.5 percent to 56.2 percent, according to World Bank.

In the same period, that figure in the U.S. decreased from 30.8 percent to 26.5 percent, while in China, it fell from 50 percent to 37 percent.

Since the Vietnamese government began pursuing its open door policy in 1986, foreign direct investment (FDI) has flowed in, attracted by the advantage of low-cost manufacturing.

Since then, Vietnam has entered many bilateral and multilateral free trade agreements including the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) and the EU – Vietnam Free Trade Agreement (EVFTA).

Vietnam has been reaffirming its open economy policy consistently. Last month, Prime Minister Nguyen Xuan Phuc said Vietnam’s development demonstrated that trade was an important driver for growth and employment.

“Protectionism is not the answer for the prosperity of nations,” he told Singaporean newspaper The Strait Times.

Vietnam’s trade turnover reached $312.1 billion in the first eight months this year, up 14.5 percent year-on-year, according to Vietnam Customs. The country also enjoyed a record-high trade surplus of $4.69 billion in this period.

The U.S. was the largest export market for Vietnam in the period, with a value of $30.8 billion, followed by the E.U. at $27.8 billion and China at $24.4 billion.

The World Bank has forecast that the Vietnamese economy will grow by 6.8 percent this year.

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