Exports are expected to hit $151 billion this year from $132 billion in 2013, according to a report on the country’s macroeconomic outlook issued by HSBC on Tuesday.
Despite sluggish global and domestic demand, the report credited Vietnam’s competitive minimum wage and its low costs for water and electricity for boosting exports.
Since the global financial crisis, Vietnam's exports have grown by double digit. HSBC’s analysis of revealed comparative advantage, global market share, and growth rates show that the country is following a traditional export-oriented growth model wherein shipments grow increasingly less dependent on raw material extraction.
“We believe trade, especially more diversified and increasingly capital-intensive agriculture and manufacturing exports, will help Vietnam grow out of its problems,” said economist Trinh Nguyen of HSBC.
The country still has a large working-age rural and urban population. Using its cheap wages and improved infrastructure to attract capital-intensive manufacturing is the fastest way to provide jobs to its eager, literate and young populace.
The rapid expansion of the employment sub-index is the most encouraging leading indicator for the future of Vietnam’s manufacturing and GDP growth. HSBC expects output to continue to expand next month as the new-orders-minus-inventories indicator remains positive.
The rapid expansion of exports and slower import growth helped turn Vietnam's trade balance in a positive direction for the past three years.
HSBC has forecast a trade surplus of $1.8 billion for 2014 and a narrower surplus of $0.5 billion in 2015.