Vietnam among Short Term Benefitor from Trade War, WB says

Diep Nguyen

10:05 04/07/2019

BizLIVE -

At the same time, as a highly open economy with a trade to GDP ratio of close 200 percent, Vietnam is exposed to heightened uncertainty and potential disruptions to global supply chains.

Vietnam among Short Term Benefitor from Trade War, WB says
Vietnam seems to have benefitted from export diversion following the escalating China-U.S. trade dispute. Rising tariffs and associated increases in the cost of inputs and final products are expected to dampen international trade flows and global GDP in aggregate. 
At the country level, there are, however, both winners and losers. Based on U.S. trade data for the period since it imposed the first round of tariffs in mid-2018, Vietnam is among the beneficiaries of the trade dispute, at least in the short term.
First quarter data suggests that Vietnam’s Q1 goods trade surplus with the US rose to US$13.5billion, up from US$7.5billion Q1 last year, with gains concentrated in goods subject to increased tariffs. 
At the same time, as a highly open economy with a trade to GDP ratio of close 200 percent, Vietnam is exposed to heightened uncertainty and potential disruptions to global supply chains. The US Treasury classified Vietnam among nine trading partners on its “Monitoring List” that merit close attention to their currency practices.
The United States-China trade tensions, which started to escalate from mid-2018, has reverberated across the global economy. Rising tariffs and associated increases in the cost of inputs and final products are expected to dampen international trade flows and global GDP in aggregate. 
At the country level, there are, however, both winners and losers, as reflected in the U.S. trade data for the period since it imposed the first round of tariffs in mid-2018 that has been followed by retaliatory tariff hikes. Based on these figures, Vietnam is among the beneficiaries of the trade dispute, at least in the short term and the gain is roughly estimated at about 2.2 percent of Vietnam’s 2018 GDP.
The United States is among the most important markets for Vietnam’s exports. On average from January 2005 to March 2019, the value of Vietnam’s exports to the United States grew by about 35 percent and accounted for about 20 percent of Vietnam’s total export earnings. 
Vietnam’s key exports to the U.S. market are mainly consumer goods, such as footwear, garments, phones, furniture, travel goods, and seafood, and their shares in U.S. imports have continued to expand. 
The trade war has added another dynamic, however, as Vietnam’s exports to the United States are currently comprised replacing exports from other Asian countries (i.e. there is not a lot overlap between goods produced in Vietnam and the goods made in the U.S). At the end of Q1-2019,Vietnam rank 7th among exporting countries to the US.

DIEP NGUYEN

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