Vietnam could be one of the biggest winners or biggest losers in a changing global economy. That finding comes from Moody’s Investors Services, a financial company.
Recently, Moody’s announced findings of a study that looked at 23 countries across the Asia Pacific region. It found that Malaysia, Taiwan, Thailand and Vietnam were the most likely to gain from trade moving away from China.
But, Vietnam was among the countries that could be most hurt by a trade slowdown, too.
The Southeast Asian country has been searching for a way to gain from trade tensions between the U.S. and China.
But those gains might not last, especially if a trade war between the world’s two biggest economies reduces global trade overall.
Analysts say that Vietnam, a trade-dependent country, needs to be ready.
Sian Fenner is a lead economist at Oxford Economics in Singapore. She wrote that Vietnam’s “dependence on foreign investor flows also makes it vulnerable to changing global sentiment.”
Fenner added, “As a small, open economy heavily dependent on external trade, an increase in protectionism and slower global trade would have significant … effects for Vietnam, even if it is not the direct target of increased tariffs.”
U.S. President Donald Trump put tariffs on $50 billion worth of Chinese products last summer, citing the country’s unfair trade practices. China responded with its own import taxes on U.S. goods. Government officials from both sides are supposed to meet this month to resolve the dispute.
However, observers are divided on how likely a resolution to the conflict will be.
The trade war, combined with similar trade protectionism around the world, raises the chances of global economic instability.
While Vietnam cannot do much about the trade policies of other countries, it has received a number of recommendations on how to help itself. Advisers urge Vietnam to make reforms to its economy, for one.
Three experts, Tuan Ho, Trang Thi Ngoc Nguyen, and Tho Ngoc Tran, wrote in a report for Yusof Ishak Institute that the Vietnamese government should get serious about privatizing some state owned companies. They also suggested support for small businesses, such as through loans, and tougher screening of foreign investments.
The three noted that economic reform and wise public investments would help Vietnam deal with economic problems in the future. “That is particularly important in the context of a long-lasting global trade tension,” they conclude.