European businesses bullish on Vietnam’s economic outlook

In the third quarter the BCI climbs from 66 up to 74, approaching the previous levels in the first quarter of 2011. The rise is influenced by high expectancy on the current negotiations of the EU Vietnam FTA. Additionally the survey shows that for a majority of participants the incidents from earlier this year are being put to past.

Continued stable and overall positive business situation

When comparing with previous quarter the number of respondents that assert their business situation as positive has seen a slight rise and is now at 48%, the largest group of respondents that perceive the business situation as negative, having declined from 21% last quarter to a single digit at 8% this quarter. Respondents finding the current business situation to be excellent or very poor were both low, 5% respectively.

This positive improvement and perception of the current business situation is partially a result of a return to normality for several of the respondents in light of the incidents earlier this year.

When asked about the incident earlier this year and whether or both the business situation has returned to normal, 10% of respondents report that previous incidents still notably impact their business at this time, 18% said they can still notice some repercussions and 39% of respondents, notably the largest of the three, said that the situation has been restored. This tells us that a full 2/3 of respondents were or is still affected from earlier this year but also that the business situation is largely restored for a majority of them. This in turn reflects the positive perception of the current situation.

Strong business outlook with high expectations for the coming months

The expectations on the EU Vietnam FTA are clearly expressed as the respondents were asked about the outlook of their enterprises. 62%, roughly two in three respondents perceive the outlook of the next quarter as good. The second largest group of respondents, still at the relatively substantial number of 24%, perceive the outlook of business as neutral.

To allow for a comparison the BCI asked how the FTA currently being negotiated between EU and Vietnam will counterbalance similar business initiatives made by regional trade partners of Vietnam, such as the republic of Korea and Japan. Notably the largest group, around half of the respondents, expects the FTA to be helpful when placed in relation to the other free trade initiatives being negotiated.