Vietnam may replace China as the “World’s Factory,” reports our Chinese-language sister paper Want Daily.
The country’s GDP growth is set to reach 6.1% this year and 6.2% in 2016 and it may become the second fastest growth economy among ASEAN member countries after India, according to Asian Development Bank’s report Asian Development Outlook 2015. Vietnam was also considered the country with the brightest future among VISTA economies which include Indonesia, South Africa, Turkey and Argentina, according to the report.
Although the country’s annual growth between 1998-2008 reached 7.5%, its economy fell into recession due to inflation, declining growth and labor disputes. Bloomberg said it still has a chance to be an emerging power in Asia due to its outstanding geographical location, growing young population and huge investments from foreign companies such as Samsung and Intel. PricewaterhouseCoopers also said the country may become the world’s fastest-growing economy by 2050 since its manufacturing sector is already compeitive and will become more competitive than China’s into the future. Its political environment also provides a preferable alternative to Japanese businesses seeking to boost their regional investments while averting Sino-Japan disputes.
It may also replace China as a major global manufacturer, as growing labor costs have hurt China’s competitiveness, while 40% of Vietnam’s 90 million people are between 15-49 this year, creating a secure a labor force at a better investment price, said Frederic Neumann, one of the heads of HSBC’s Asian Economic Research.
Experts warns though that the country’s expansion may suffer from its large amount of nonperforming loans, technology gaps and widespread corruption. Karel Eloot, head of McKinsey & Co’s Asia Operations Practice, said low productivity in its manufacturing sector may also impede the expansion. Some experts said it remains a question whether Vietnam can fully realize its growth potential.
Source: http://www.asean-investor.com
Key words: Vietnam, World’s Factory, China
