Asia House Annual Lookout 2024: Vietnam Takes the Lead in Asian Trade Growth

Vietnam and Thailand are currently at the forefront of trade growth in Asia amidst the ongoing economic recession, as stated by UK-based research organization Asia House.

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Released on January 23 in London, the Asia House Annual Outlook 2024 examines how eight key economies in Asia will power ahead in 2024, delivering growth of circa 5 percent overall despite external global pressures including geopolitical tensions, conflict, and a challenging inflation and interest rate environment. The report forecasts Vietnam and the Philippines will be the standout performers.

According to the report, in the first ten months of 2023, FDI in manufacturing projects was roughly USD 18 billion, or 73% of the total FDI inflows registered in the same period. Additionally, foreign investors will increasingly turn to Vietnam to diversify their supply chains away from China.

According to the report, in the first ten months of 2023, FDI in manufacturing projects was roughly USD 18 billion, or 73% of the total FDI inflows registered in the same period. Photo: Vietnamnet

Vietnam’s digital transformation program aims to situate its domestic tech firms as global players. Vietnam has a thriving tech start-up environment and there has been significant public investment in AI. The National Innovation Centre supports tech breakthroughs in multiple sectors, while the banking sector is very active in AI testing and application. VPBank has applied AI in currency transactions, personal credit, and digital banking, while Vietcombank has cooperated with FTP Smart Cloud to develop a customer chatbot platform, called VCB Digibot.

Vietnam is a leader in cryptocurrency adoption and blockchain projects. It is estimated to have more than 200 active blockchain projects and has been deploying blockchain technology for several functions, including credit guarantees in trade and supply-chain finance.

The report, which includes detailed outlooks for China, India, Japan, Indonesia, Vietnam, Malaysia, Thailand, and the Philippines, also points to multiple risks facing Asia, from possible disruptions caused by the number of elections in this “super-election” year, to escalating political tensions, volatile energy markets and restrictive monetary conditions.

Efforts to create digital currencies are underway in several Asian countries, in addition to the collaborative bridge project – a project between banks in China, Hong Kong, Thailand, and the UAE aimed at reducing cross-border transfer times using multi-currency CBDCs.

Discussing digital transformation, Pamela Mar, managing director of the International Chamber of Commerce’s Digital Standards Initiative, told event delegates, including GTR, that Asia had succeeded in putting “digital front and center”.

The report notes that the availability and use of green finance, “which slowed in 2023 amid restrictive financial conditions, is poised to expand”. This, it says, is due to “the outperformance of green bonds and the importance of state-owned enterprises in the region”.

Asian countries will aim to “entrench growth in green finance” in the coming years to drive investment in renewable energy and sustainable manufacturing, it adds.

And while the economic slowdown in China is “a concern”, the report says, forecasts put the country’s growth at between 4.5% and 5%.

Zheng Zeguang, China’s ambassador to the UK, emphasized China’s strengths to Asia House delegates, noting that “in the first 11 months of last year, the number of newly established foreign-invested enterprises in China grew by over 36% year on year”.

Looking ahead, Zheng remained bullish, saying: “Betting against China has never succeeded in the past and will not succeed in the future.”

Discussing the results of Taiwan’s election, Zheng said that it had “in no way changed the basic fact that Taiwan is part of China and there is only one China in the world”.

The report points out that Asia still faces significant uncertainty and geopolitical risks, including elections in India and Indonesia, volatility in US interest rates, and disruption to maritime trade.

And despite trade growth looks set to exceed North America’s, it still lags behind that of the Euro area.

Charlotte Pho