Moody’s: TPP collapse will affect VN, but not severely
The potential collapse of the Trans-Pacific Partnership (TPP) trade pact may not impact Vietnam’s sovereign credit quality as much as was projected earlier, Moody’s said.
Moody’s cited research by the Peterson Institute for International Economics (PIIE), which has ranked Vietnam and Malaysia among the countries in the list of 12 TPP signatories that expected to see a sizeable growth spurt. The two countries would have benefited from trade with the United States and from large, long-term foreign direct investment inflows.
The PIIE research found that the Vietnamese economy – measured by real income in 2015 in US dollars – would be 8.1% larger in 2030 compared to a baseline without the TPP, while Malaysia’s would be 7.6% bigger.
The agreement would also have improved trade access - even where agreements already existed - to some hitherto protected markets, such as Japan’s agricultural products.
The significance of the deal is testified by its scope and size - the TPP signatory economies account for about 40% of the global GDP.
Several TPP signatory countries are now working on other trade deals such as the Regional Comprehensive Economic Partnership (RCEP) – with the exception of the Free Trade Area of the Asia-Pacific (FTAAP) agreement – but the benefits from these trade deals will be smaller than those of the TPP, as they will cover a smaller share of global trade, overlap with existing arrangements and be narrower in scope.