Vietnam Focus: AHK World Business Outlook – Spring 2024 Results

06/06/2024

Ho Chi Minh City, June 6, 2024 – Despite the common challenges in the global economy, German investors maintain a positive stance regarding the performance of their businesses and the potential for macroeconomic growth in the Vietnamese market. According to the results, 55% of German companies expect growth in their businesses, 55% are optimistic about their business operations in Vietnam over the next 12 months, and 57% anticipate economic growth in Vietnam.

Economic Growth Expectations

Thanks to the swift implementation of government action plans and stable macroeconomic conditions, Vietnam has sustained a positive economic growth rate. Consequently, German businesses operating in Vietnam are more optimistic compared to the autumn of 2023. However, in the short term, they remain cautious due to geopolitical challenges such as inflation, the trend of decoupling major economies, and increasing political influence on supply chains.

81% of surveyed businesses are confident about their business situation in Vietnam (satisfied and positive), and around 64% commit not to reduce their workforce in the next 12 months.

Risks and Challenges

German investors are optimistic about the Vietnamese market's prospects but remain cautious about short-term plans due to global economic fluctuations. They identify risks such as low global demand (38%), concerns about economic policy framework conditions (38%), a shortage of skilled labor (33%), and potential supply chain disruptions (33%). Additionally, the global economic downturn poses challenges related to energy costs (25%), raw material costs (25%), and trade barriers (22%).

German businesses also face difficulties in diversifying supply chains and expanding into new markets. Specifically, 71% of German investors in Vietnam struggle to find suitable suppliers/business partners, 47% face increased legal issues, and 32% see trade barriers as a significant challenge.

Opportunities

Despite existing difficulties and challenges, German businesses recognize opportunities for growth in this promising market. In response to rising geopolitical challenges, 58% of companies have implemented plans to develop new sales markets, 50% are expanding their supplier networks, and 43% plan to increase local investments.

About the AHK World Business Outlook (AHK WBO)

The AHK World Business Outlook is based on an annual survey by the German Chambers of Commerce and Industry (DIHK), involving members of the German Chamber of Commerce Abroad, delegations, and representative offices (AHK). In spring 2024, the survey gathered responses from over 4,300 German companies worldwide and their global business partners.

With active participation from German companies in Vietnam and globally, the AHK WBO is highly regarded by economic policymakers, business leaders, media, and experts. It serves as a barometer of German business confidence in Vietnam, the region, and worldwide. The survey results guide evaluations of the development status of German businesses, trends over the next 12 months, investment plans, hiring plans, and German investors' macroeconomic expectations for Vietnam.

Survey participants: 38% of companies are from the industrial and construction sector, 42% are from the service sector and 20% are commercial companies.