What will happen to Vietnam if Japan's economy falls into recession?
The news that Japan has entered an economic downturn has raised concerns among Vietnamese exporters. Meanwhile, experts believe Japan will still be keen in providing ODA (official development assistance) to Vietnam.
The international press reported that Japan’s economy has seen a decline, quoting a report from the Japanese government which says the GDP of the world’s third largest economy decreased by 0.8% in the third quarter after falling by 0.7% in the second quarter.
Vietnamese businesses are worried, anticipating that their exports to Japan will decrease as the result of a decline in demand.
According to Pham Xuan Hong, chair of the Ho Chi Minh City Textile, Garment, Embroidery and Knitting Association, Japan, the US and EU are the three largest export markets for Vietnam.
Japan’s economic slowdown will affect Vietnam’s exports to the market, though influences have not been seen as enterprises are still implementing the orders they took before.
Le Thi Thanh Lam, general director of Saigon Food, who is drawing up a business plan for 2016, said if the Japanese economy slows down, she will have to re-plan exports to the market.
Lam said there has been no change with the orders from Japan, but the situation may become worse in the future.
Despite the economic slowdown, the Japanese Ministry of Foreign Affairs still proposed to increase the budget for ODA by JPY46.7 billion to JPY470.6 billion for the 2016 fiscal year.
Nguyen Tri Hieu, a renowned economist, emphasized that Japan has not entered a recession, and that Japan has just ‘seen GDP growth decreasing’, explaining that in principle, an economy will be considered falling into recession if it sees the GDP decreasing for three consecutive quarters.
Commenting about ODA commitments, he said Japan is a country which strictly follows the commitments it makes to other countries. He does not think Tokyo will change its policy on ODA.
However, Hieu admitted that in the current conditions, one should not expect to see Japan to remain ‘generous’ in making ODA commitments.
“They (Japan) will continue providing ODA, but the commitments may be lower if the Japanese economy does not show significant improvement,” he said.
In fact, Hieu believes ODA brings large benefits to Japan, the donor, itself. In principle, donors always set conditions on ODA recipients. For example, ODA recipients, including Vietnam, have to use their products and specialists.
Meanwhile, Dinh Trong Thinh from the Finance Academy noted that Japan’s ODA will create favorable conditions for Japanese investors to make outward investments in the future, because ODA capital is used to develop infrastructure items in the countries which receive ODA.
Vietnamese businesses are worried, anticipating that their exports to Japan will decrease as the result of a decline in demand.
According to Pham Xuan Hong, chair of the Ho Chi Minh City Textile, Garment, Embroidery and Knitting Association, Japan, the US and EU are the three largest export markets for Vietnam.
Japan’s economic slowdown will affect Vietnam’s exports to the market, though influences have not been seen as enterprises are still implementing the orders they took before.
Le Thi Thanh Lam, general director of Saigon Food, who is drawing up a business plan for 2016, said if the Japanese economy slows down, she will have to re-plan exports to the market.
Lam said there has been no change with the orders from Japan, but the situation may become worse in the future.
Nguyen Tri Hieu, a renowned economist, emphasized that Japan has not entered a recession, and that Japan has just ‘seen GDP growth decreasing’, explaining that in principle, an economy will be considered falling into recession if it sees the GDP decreasing for three consecutive quarters.
Commenting about ODA commitments, he said Japan is a country which strictly follows the commitments it makes to other countries. He does not think Tokyo will change its policy on ODA.
However, Hieu admitted that in the current conditions, one should not expect to see Japan to remain ‘generous’ in making ODA commitments.
“They (Japan) will continue providing ODA, but the commitments may be lower if the Japanese economy does not show significant improvement,” he said.
In fact, Hieu believes ODA brings large benefits to Japan, the donor, itself. In principle, donors always set conditions on ODA recipients. For example, ODA recipients, including Vietnam, have to use their products and specialists.
Meanwhile, Dinh Trong Thinh from the Finance Academy noted that Japan’s ODA will create favorable conditions for Japanese investors to make outward investments in the future, because ODA capital is used to develop infrastructure items in the countries which receive ODA.