Textile industry: Bright prospects in the trade war

The world economy is testing its resilience

A war of great size, diversity in the front and tensions of magnitude will inevitably make a landmark change to the global economic outlook as well as Vietnam, even if possible. not the same trend.

Leaving behind a period of positive recovery, the world economy is entering a new phase, testing its resilience under the challenge called "trade war", with its consequences up to date. At present or in the coming time, mainstream forecast is still a bleak and difficult color.

The speed of global economic growth in general and developed countries in particular has slowed significantly.

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GDP growth gradually decreases from 3.6% in 2018 to 3.5% in 2019 and 3.2% in 2020, according to the forecast of the International Monetary Fund (IMF), the lowest level since 2010.

In particular, the US, China and other parties that have close bilateral trade relations with these two countries such as Korea, Singapore, Taiwan, and Australia are among the most affected groups.

China is struggling to not lose the 6% growth threshold, and the US is also likely to only achieve a modest growth rate of 1.9% by 2020.
The business investment environment contains a lot of uncertainty, coupled with the sudden breakdown of the global trade value chain, weakening two important areas, the growth engine of the world economy, production and export. password.

PMI index measures the health of manufacturing industries in many countries and regions such as the EU, Japan, and South Korea… continuously going down, even falling below 50 points for several consecutive months, signaling contraction. narrow production activities.

Meanwhile, international trade transactions of the 10 largest countries also reversed, recording a negative growth of 3.4% in the first 6 months of 2019 compared with the normal growth of 5 - 10% for the periods. recently.

However, the likelihood of a crisis associated with a 10-year economic cycle is still low, with a probability of about 20-30%, at least within the next 1 year with the expectation of US trade war - Although Trung has not been able to finish yet, the parties will find a relative equilibrium to avoid falling into the worst scenario when the consequences are partially foreseen.

Impact on Vietnam, unknowns need to be tracked

Vietnam, with the characteristics of a country with a large economic openness, when a new trade war breaks out, is expected to face difficulties from many sides. But as time passed, full of surprises, Vietnam's economy welcomed a more favorable scenario, at least in the period of 2019 - 2020.

The GDP growth rate remains at a high level, expected to complete the National Assembly's target set out in 2019 at around 6.8% and possibly 6.6% in 2020.

It should be emphasized that this result is the contribution of foreign direct investment and import-export activities, which are often components of high sensitivity to external shocks.

Foreign direct investment flows positively when Vietnam has become a "haven" for businesses in a trade war.

FDI disbursement in the first nine months of the year reached more than 14 billion USD, up 7.3% over the same period in 2018 and aiming to a record of about 21 billion USD / year in 2019 and 2020.

Many large corporations such as Google, Sharp, Nitendo, Foxconn ... have decided to build new, expand investment in Vietnam and in the near future may appear names like GoerTek, Apple ...

Import and export activities have also achieved impressive achievements. Contrary to the downward trend of global trade in general and regional countries in particular such as Thailand, Malaysia, and South Korea, Vietnam's first 9 months export and import turnover reached 382.7 billion USD. increased 9% over the same period last year; of which, export increased by 8.2% and import increased by 8.9%.

Some strong export industries have maintained high growth rates such as computers, electronic components 17%, textiles 11%, footwear 13%, wood 18%. The trade balance sees a surplus of USD 5.9 billion after 9 months and this positive state is not expected to change until 2020.

Besides the growth story, the stability of the macro foundation is also a remarkable achievement. The plentiful supply of foreign currencies, the domestic currency tends to strengthen in real value terms, inflation is controlled at a low level, creating room for the State Bank of Vietnam to manage monetary policy more loosening, contributing to growth support.

However, everything has two sides. The long-term trade war, risks to Vietnam's economy may gradually appear. Firstly, trade fraud shows signs of increasing, leading to the risk of high tariffs imposed on exported goods when a part of foreign investment flows in the direction of taking advantage of Vietnamese origin. Male.

Second, on a more serious level, Vietnam may be caught even more deeply in the confrontation between the US and China, under increasing pressure from both sides.