Impact of Brexit on Vietnam's economy

(Baonghean.vn) - The British people's decision to leave the EU is receiving great attention from the whole world. Many economies are expected to be heavily affected by this decision. What do experts say about the impact of this decision on the Vietnamese economy?

Vietnam's economy is affected by Brexit, but not much

Brexit will certainly have an impact, but not to a large extent, because the UK is not a major direct trading partner of Vietnam. Most Vietnamese goods entering the UK are exported via the EU. Currently, the EU is Vietnam's second largest trading partner.

In an interview with the BBC, banking and finance expert Nguyen Tri Hieu commented: “The UK is not a major partner of Vietnam, but the weakening of the EU due to the loss of an important ally like the UK could negatively affect trade relations between the bloc and Vietnam, while the EU is the number two export market.”

In addition, the exchange rate is also affected. When the Euro and GBP depreciate, the central exchange rate will be affected because the central exchange rate includes these two currencies. The Vietnamese Dong is likely to be adjusted upward. When the domestic currency appreciates, exports from Vietnam to the EU and the UK will be less competitive.

“The depreciation of the British pound and the euro may benefit Vietnamese people traveling or studying in the UK, but on the contrary, it makes Vietnamese exports more expensive and less competitive when entering the UK market.”

“In addition, the depreciation of the British pound will reduce the UK's GDP growth, Vietnam's exports will face difficulties due to rising prices, and the purchasing power of goods in the UK will decline.”

Vietnam's economy is affected by Brexit, but not much. Photo: Internet

According to the General Department of Vietnam Customs, the total value of import and export turnover between Vietnam and the UK has continuously increased over the years.

Vietnam's export turnover to the UK achieved a compound annual growth rate (CAGR) of nearly 17% during the 2008-2015 period, reaching a record of 4.65 billion USD in 2015, equivalent to 15% of Vietnam's export value to the EU region.

In the first five months of 2016 alone, Vietnam maintained a trade surplus with the UK at 1.7 billion USD, a stable rate compared to the figure of 3.9 billion USD in the whole of 2015.

Nearly 47% of Vietnam's exports to the UK are phones, computers, components and other electronic equipment.

Britain's exit from the EU immediately caused gold and USD prices to increase in Vietnam. Photo: Getty

According to the General Department of Vietnam Customs, the total value of import and export turnover between Vietnam and the UK has continuously increased over the years.

In the first five months of 2016 alone, Vietnam maintained a trade surplus with the UK of $3.9 billion in 2015 and $1.7 billion.

Nearly 47% of Vietnam's exports to the UK are phones, computers, components and other electronic equipment.

Indirect influence from China is greater than from Britain

When Britain left the EU, the euro and the British pound (GBP) fell sharply. Like Vietnam, China's exports were affected. Chinese goods became more expensive and less competitive. To support exports, China devalued the yuan.

This move makes it harder for Vietnamese goods to compete with Chinese goods and makes it difficult for the Vietnamese currency to maintain its value.

Thanh Hien

(Synthetic)