Russia-Ukraine conflict unlikely to jolt Vietnam economy: experts

In fact, some of its impacts could also create opportunities for exporters, they add.

Tran Quoc Hung, CEO of the Institute of International Finance (IFF) in Washington D.C., said: "The Russia-Ukraine tension and economic sanctions by Western nations have caused shortages and raised prices for a number of commodities such as oil and gas, grains and some strategic minerals."

He said it would be harder to strike deals with Russian companies, either directly or indirectly, due to current difficulties in cross-border payments. This situation will result in shortages, delays and increase costs in many industries' production lines.

In general, the economy will stagnate and inflation will rise, resulting in deflation. Doing business will become tougher. Vietnam will also feel the ripple effects of these developments.

While agreeing in principle with Hung's analysis, Nguyen Duc Thanh, Director of the Vietnam Center for Economic and Strategic Studies (VESS), said that direct impact of the conflict on Vietnamese economy and even Southeast Asia, would not be significant.

He explained that Russia's nominal GDP was small at around $1.6 trillion, with an import-export structure similar to that of developing countries, because it only exports raw materials, does not produce high-technology products and services or export equipment. Meanwhile Russia primarily imports consumer goods and not a lot of machines.

Russia's economic openness relative to GDP is around 50 percent, which is low when compared to other open economies. As a result, Russia's economic crisis will have little direct impact on the global economy, Thanh said.

Last year, Vietnam's two-way trade with Russia reached about $5.5 billion, or about 1 percent of the former's total import and export turnover.

"Some businesses that do business directly with Russia will of course be affected, but the impact of the conflict on the overall Vietnamese economy won’t be significant," Thanh said.

He said that the "confusion" in the European market may have an indirect impact on Vietnam's economy as the bloc has been rendered "wretched" by the Russia-Ukraine conflict.

"Europe's purchasing power may be declining, but this trauma is also fading quickly," he said.

Meanwhile, businesses have to learn to adapt because, in an uncertain environment like today.

"We should not exaggerate the impact of the crisis. The spillover effects will take time, so businesses still have conditions to adjust."

Entrepreneur Pham Phu Ngoc Trai agreed with Thanh's observation, saying risk was a part of doing business.

"It is unavoidable since Vietnam has signed dozens of free trade agreements and has relations with many countries,"

In the current environment, it is critical for businesses to re-evaluate their forecasting and risk management capabilities in order to make appropriate decisions and timely market adjustments, Trai said.

Several experts noted that apart from the challenges and difficulties, businesses should also look for opportunities.

Hung said now was an excellent time for Vietnam to increase export of rice and other agricultural products to the E.U. market, where these are in high demand with imports of approximately $160 billion per year.

"Because of the embargo and the automatic boycott of Russian goods, the E.U. requires an alternative source of grain and agricultural products," Hung explained.

Therefore, Vietnam should concentrate on increasing its market share in this market in the near future by utilizing the EVFTA Agreement's rice export quota of 80,000 tons per year at a tariff rate of 0 percent.

Vietnam exported just 60,000 tons of rice last year.