German businesses in Viet Nam 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 91 percent of German companies intending to expand in Viet Nam and 40 percent planning to increase their workforce in the next 12 months.

Thanks to the prompt implementation of government action plans and stable macroeconomic conditions, Viet Nam 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.

Eighty eight percent of the survey participants were confident about their business situation in Viet Nam (satisfactory or good), and nearly half expected economic growth to remain steady, while 21 percent expected it to speed up.

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

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

Nevertheless, Viet Nam 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 Viet Nam prioritised diversifying their supply chains, with Viet Nam 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. — VNS