German companies have high expectations of Vietnam market: survey

Infographics show German businesses in Vietnam are more confident about growth now than they did last autumn (Infographics courtesy of AHK Vietnam)

German businesses in Vietnam are more confident about growth and have positive expectations about the country’s economic growth than they did in autumn 2022, according to a biannual survey.

The German Chambers of Commerce Abroad (AHKs) survey found that 91% of German companies intend to expand in Vietnam and 40% plan to increase their workforce in the next 12 months.

Thanks to the prompt implementation of government action plans and stable macroeconomic conditions, Vietnam has maintained positive economic growth, and so German companies are increasingly optimistic.

But their short-term expectations remain cautious due to the geo-political challenges such as inflation and the increasing political influence on supply chains. 

88% of the survey participants are confident about their business situation in Vietnam (satisfactory or good), and nearly half expect economic growth to remain steady, while 21% expect it to speed up. 

The risks they identified due to global economic fluctuations include low demand (51%), economic policy framework (46%), shortage of skilled workforce (34%), and potential disruptions to the supply chain (28%). 

They said long-term geopolitical challenges include inflation and monetary policy (41%), fragmentation of the global economy (41%) and increase in political influences on supply chains (40%).

Nevertheless, Vietnam is expected to see a resurgence in economic growth in the medium term fueled by factors like free trade agreements, the global trend of shifting and diversifying manufacturing supply chains towards competitive hubs in Southeast Asia and the inflows of green investments. 

Half of German companies in Vietnam prioritised diversifying their supply chains, with Vietnam being their top choice, followed by Malaysia and Thailand.

The survey was done by the AHKs by polling more than 5,100 German companies world-wide in March and April.

VNA