Vietnamese government to weigh impacts from Brexit

By Toan Dao July 8, 2016 | 05:02 pm PT

Policymakers and experts have previously said Vietnam’s exports will face hurdles after Brexit vote.

Vietnam’s central government has asked three ministries to evaluate impacts on the local economy after the United Kingdom (U.K.) voted to leave the European Union (E.U.) last month.

According to a monthly resolution of the government in June, the Ministry of Planning and Investment has been requested to collaborate with other ministries and agencies to set up different scenarios about economic growth and inflation. These will assist the central government to proactively manage the economy in any circumstances. They are told to “particularly take into account the impacts [on Vietnam] from Brexit.”

The Ministry of Finance has been asked to keep a close watch on the international financial market, especially on the Brexit-related developments, which may influence Vietnam’s duty to pay off public debt.

Meanwhile, the Ministry of Industry and Trade has been told to watch carefully the trading relationship between Vietnam and other major partners and “access the impacts [on Vietnam] from the Brexit.”

The domino effect of net sales caused the VN-Index to spiral by 34 points at one point on June 24 after Brexit news came in, the biggest drop so far this year, while transactions climbed to a 2016 record of over VND6 trillion ($266 million).

Experts said that Vietnam’s exports may be harmed due to Brexit’s direct hit on currency moves, battering the British pound and making Vietnamese exports less competitive.

Vietnam’s exports to the U.K. alone are currently estimated at roughly 2.9 percent of the Southeast Asian country’s total export value, reaching $4.6 billion last year. Experts forecast that a 10 percent decline in Vietnam’s exports to the U.K. could translate into a $460 million loss.

The U.K., however, has pledged to continue to work with Vietnam to increase trade and investment ties between the two countries after the British voted to leave the E.U., Lesley Craig, Charge d’Affairs of the British Embassy in Vietnam told VnExpress via e-mail.

> Vietnam's exports face hurdles after “Brexit” vote