Vietnam emerging as key destination for supply chain relocation

Sue Lee, Head of Markets for the Asia South cluster at Citi. Photo courtesy of Citi

What do you think about concerns that Vietnam's near-term GDP outlook could be overshadowed by potential re-escalation of trade wars?

According to Citi Research, while the re-emergence of trade war risks is a possibility, we remain confident that Vietnam's industrial production and exports will continue to bolster its GDP in the medium term. The manufacturing sector is expected to expand further as FDI inflows persist, particularly in the thriving electronics sector, which supports industrial capacity growth.

Vietnam is also well-positioned to diversify its export markets globally. The country's exports, driven significantly by U.S. demand, have shown remarkable growth, particularly in electronics and machinery. Additionally, as GDP per capita rises, domestic consumption is expected to expand, contributing to sustained economic growth.

Vietnam's GDP per capita has surpassed $4,000, putting it on par with Indonesia. As urbanization progresses, more households are transitioning to the middle class. We remain optimistic that robust exports, coupled with recovering domestic demand and ongoing structural reforms, will continue to drive Vietnam's GDP growth.

From your perspective, what is Vietnam's key advantage compared to other Asian emerging markets?

Our recent Supply Chain Finance report highlights Vietnam and India as the major beneficiaries of supply chain relocation. Multinational companies are diversifying their regional networks under the "China plus" strategy, with ASEAN—particularly Vietnam—emerging as a preferred destination.

Vietnam has seen substantial investments in 2023 and 2024, particularly in electronics, attracting FDI from key markets such as Japan, Korea, Singapore, and the Greater China Region. Asia-based trade corridors are projected to grow significantly, and Vietnam is positioned as a prime beneficiary of this trend.

In this new era of interconnected trade dynamics, Vietnam's strategic role in the global supply chain is its most significant advantage.

What are your insights on how the global macroeconomic landscape will shift in 2025, and how does Citi's product suite support clients in managing associated risks?

Our economists anticipate that the Fed will continue to cut interest rates in 2025. While certain trade policies may strengthen the USD, we expect Vietnam's major economic balances to remain within the government's projections.

With our cutting-edge digital solutions and robust technology, Citi leads the evolving foreign exchange market in Vietnam. Our mission is to empower businesses with seamless, secure, and efficient FX capabilities, enabling them to thrive in today's dynamic economy.

In the corporate sector, the adoption of FX technology is accelerating, with treasury professionals increasingly recognizing its value in automating trade lifecycles, visualizing FX exposure, and managing risks. Citi is well-positioned to support local clients with risk management and hedging solutions as supply chains continue to evolve.

How does Citi view the future of Vietnam's financial market, and what role does Citi Markets aim to play in its development?

We see a bright future for Vietnam's financial market, driven by the country's strong economic growth, rising foreign investments, and continuous regulatory improvements. As Vietnam integrates more deeply into the global economy, we anticipate significant opportunities for growth and innovation across multiple sectors.

This year marks Citi's 30th anniversary in Vietnam. Over the past three decades, we have played an active role in developing Vietnam's financial markets. Leveraging our global expertise and strong local presence, we offer comprehensive solutions to both foreign and domestic clients in Vietnam, including FX hedging, rates and commodities derivatives, liquidity management, and structured funding solutions.