European firms’ confidence in Vietnam’s business environment slightly declines but still strong: EuroCham

At An Phu Printing and Garment Co., Ltd., in Hung Yen province (Photo: VNA)y

The confidence of European enterprises in Vietnam’s investment and business environment slipped further to 62.2 percentage points in the wake of a worsening global economic downturn but still remains strong, according to the recent Business Climate Index (BCI) survey published by the European Chamber of Commerce (EuroCham) in Vietnam.

The survey, produced by YouGov Decision Lab, said that although Vietnam's economy grew at a record 13.67% year-on-year in the third quarter of 2022, the BCI declined for the second consecutive quarter, dropping 6.4 index points from the second quarter and 10.8 points from the first quarter.

The result were attributable to instability of the global economy due to the escalating conflict in Ukraine, persistent inflationary pressures, a labour shortage worldwide, and stagnant global growth.

However, in the midst of the current global economic uncertainty, the BCI is still 10.2 points higher than its pre-pandemic level of 52.0 in the fourth quarter of 2019, and 1.2 points higher than the fourth quarter of 2020, when Vietnam was easing its pandemic-related restrictions.

According to EuroCham Chairman Alain Cany, Vietnam offers great investment opportunities for European businesses, especially prospects in the medium- to short-term.

Through the EU-Vietnam Free Trade Agreement (EVFTA) and EU’s shared commitment to sustainable development, Vietnamese and European companies have a great deal of growth potential, he said.

These BCI results are encouraging, he said, adding that Vietnam will certainly be in a better position in two or three years, demonstrating its place among the most exciting and dynamic business and investment destinations.

Meanwhile, CEO of Decision Lab Thue Quist Thomasen said a worsening global economic environment is taking its toll on the optimism amongst European business leaders in Vietnam. However, by curbing inflation, improving credit ratings and continuing GDP growth, Vietnam’s story stands out as less pessimistic globally as companies plan and look forward to 2023.

The BCI is the leading indicator of the European business and investment community in Vietnam. To better understand the Vietnamese market, EuroCham invites its more than 1,200 members, representing virtually every sector of the Vietnamese economy, to provide quarterly updates on Vietnam's business environment and forecasts for their own businesses in Vietnam./.