European Businesses Optimistic About Vietnam’s Economic Future
European business leaders are increasingly positive about Vietnam’s economic prospects, as the country cements its role as a vital player in Southeast Asia despite global challenges. This sentiment is reflected in the Q4 2024 Business Confidence Index (BCI) report released by the European Chamber of Commerce in Vietnam (EuroCham Vietnam) on January 8.
The BCI score rose significantly from 46.3 in Q4 2023 to 61.8 in Q4 2024, indicating stronger optimism regarding both current and future business conditions. This increase highlights Vietnam’s resilience in overcoming operational challenges and navigating global economic uncertainties.
Vietnam’s Economic Strengths
The report attributes Vietnam’s robust performance to its sustained growth, improving infrastructure, and emerging status as a regional hub for trade and investment. Over the past two years, the BCI hovered around the neutral midpoint of 50, occasionally dipping below. However, the Q4 2024 score marks a turning point, achieving its highest level since early 2022.
Survey results show that 42% of respondents feel positive about the current business climate, while 47% expect similarly optimistic conditions in the next quarter. Additionally, 56% foresee improvements in Vietnam’s macroeconomic outlook in the first quarter of 2025.
EuroCham Vietnam Chairman Bruo Jaspaert noted that the rise in confidence reflects recognition of Vietnam’s ongoing political and economic transformation. Despite global challenges, the country’s favorable investment climate is generating opportunities for European businesses, particularly in key sectors like technology, manufacturing, tourism, and renewable energy.
Drivers of Optimism
Jaspaert attributed the surge in business confidence to Vietnam’s economic reforms and its role in global sustainability efforts. Many survey participants highlighted the “double transformation” of digital and green transitions as significant contributors to their optimism. Businesses embracing these trends reported substantial growth, with some achieving a 40% increase in revenue compared to the previous year.
Sustainability, driven by government policies and global pressures, is increasingly shaping business strategies across multiple industries.
Vietnam: A Strategic Investment Hub
The report reveals that 75% of respondents would recommend Vietnam as an investment destination, underscoring its growing importance in Southeast Asia. Strong economic growth and expanding infrastructure make Vietnam an attractive option for European companies seeking regional expansion.
Thue Quist Thomasen, CEO of Decision Lab, which conducted the BCI survey, highlighted the optimism among European businesses about Vietnam’s potential. Many firms plan to expand operations through partnerships with local suppliers and service providers, while 30% aim to increase trade activities or relocate production to Vietnam. These moves align with Vietnam’s strategic positioning amid global supply chain disruptions.
Challenges and Infrastructure Development
Despite optimism, operational challenges persist. European businesses identified administrative burdens, unclear regulations, and difficulties in obtaining licenses and permits as the top obstacles. EuroCham experts emphasized the need for Vietnam to address these issues to maintain its momentum.
Infrastructure improvements are also expected to drive significant economic benefits. The development of the North-South high-speed railway, for example, is projected to enhance employee mobility, reduce transportation costs, and boost supply chain efficiency. Additionally, projects like Long Thanh International Airport and Hai Phong deep seaports are poised to elevate Vietnam’s logistics and maritime capabilities, further solidifying its role in regional and global trade.
Promising Outlook for European Businesses
Vietnam’s impressive rebound, as demonstrated by the EuroCham BCI, points to a bright future for European businesses operating in the country. Despite ongoing challenges, many companies are expanding operations and investing in long-term strategies.
“As Vietnam continues its transformation, the opportunities for European businesses are clear. With the right policies, infrastructure, and business environment, Vietnam can continue to attract investment and drive sustainable growth in the coming years,” Jaspaert concluded.
