VinaCapital Chief Economist assessed that the increase in hi-tech FDI inflows is boosting Vietnam’s economic growth in the coming years, despite concerns about a global recession.
In the newly released report, Mr. Michael Kokalari – Chief Economist of VinaCapital – made an optimistic assessment about Vietnam’s economic prospects and the prospect that stock prices will increase in the coming years.
With interactions from large-cap companies to tech-savvy small businesses, VinaCapital experts appreciate “the strong similarity between the Vietnamese economy in the 2020s and Japan in the 1970s when both countries embarked on increasing global value chains decades later”.
Mr. Michael Kokalari said that many international investors are interested in the story of whether Vietnam can escape the possibility of a global recession next year when other countries are struggling with slow GDP growth and inflation increased.
“In fact, Vietnam’s economic growth rate has been accelerated by 2022,” he replied.
The World Bank, IMF and others have also recently sharply revised their GDP growth forecasts for Vietnam, with more and more economists expecting growth to surpass 8% this year.
According to VinaCapital Chief Economist, one reason Vietnam’s economy excels is that foreign direct investment (FDI) is supporting the manufacturing sector, while increasing the complexity of manufactured products. in Viet Nam.
This is important because, according to Harvard research, the rise of technology in highly complex products is the strongest growth driver for a country’s economy.
In fact, corporations around the world are increasing their investment in high-tech products in Vietnam. For example, Samsung will start making semiconductor parts and Apple also announced it will start producing Apple Watch and MacBook.
Key drivers of high-tech factory investment in Vietnam include a highly skilled workforce, low wages, geographic proximity to high-tech supply chains in Asia, US-China trade straight, etc.
Mr. Michael Kokalari explained that high-tech FDI boosts Vietnam’s GDP in two ways. The first is income enhancement and the second is capacity building for complex products.
“This supports GDP growth in the short term as domestic consumption accounts for two-thirds of Vietnam’s GDP and also boosts Vietnam’s long-term economic outlook,” he said.
The new wave of FDI investment in the production of complex products will create a “spillover effect” that will force domestic manufacturers to diversify into higher value-added segments in the value chain.
However, the reality is that FDI factories in Vietnam are still importing most components/production inputs. VinaCapital expects that the “import content” will gradually decrease and the contribution of “domestic content” will increase as domestic enterprises strengthen their ability to supply input products.
Mr. Michael Kokalari concluded that the plans to manufacture the most technologically advanced products in Vietnam will ensure that the economic growth that Vietnam achieves this year will continue to be maintained in 2023.
@ Zing News