The confidence of European business leaders in Vietnam is returning despite the uncertain times, according to the latest Business Climate Index (BCI) from the European Chamber of Commerce (EuroCham) and Decision Lab.
The BCI is a regular barometer of EuroCham members and their perceptions of the trade and investment environment. Each quarter, it tracks the performance of EuroCham’s member companies and their perceptions of the economic environment in Vietnam.
The overall BCI score saw a slight increase over the last three months. It rose from 27 per cent in the first quarter to 34 per cent in April, and remained stable into the second quarter. This confirms that confidence is returning to the market after a fall during the initial emergence of COVID-19. However, the BCI also shows that European business leaders continue to feel the impact of the global pandemic and remain cautious about the future prospects of their enterprises.
The latest BCI reveals that European enterprises fared better over the last three months than first anticipated during the height of the COVID-19 pandemic. In the first quarter, just one in 10 EuroCham members had foreseen a short-term improvement in their performance. However, businesses outperformed these predictions, with 24 per cent describing their business situation as “good” or “excellent” over the last three months.
Looking ahead there are more grounds for optimism, with around a quarter of EuroCham members predicting a rise in orders in the third quarter. Meanwhile, a further 28 per cent anticipate a similar level of orders to the second quarter, and this should help to drive growth into the autumn. Despite these positive signals, companies continue to feel the impact of COVID-19 on their business operations, with around half predicting a drop in headcount in the next quarter.
Nicolas Audier, chairman of the EuroCham, said, “Despite the stormy waters of a global pandemic, our data shows that the government’s swift and effective response to COVID-19 has successfully steadied the ship here in Vietnam. While the confidence of our member companies has improved and stabilised, business leaders continue to feel the effects of this virus and remain cautious about the future prospects of their business operations.”
“The BCI also found that international travel restrictions are having an impact on European enterprises in Vietnam. The government has worked with foreign business communities to facilitate the safe return of essential workers, and we are grateful for their assistance. Looking ahead, global trade will remain unpredictable for some time but we can be confident that European business will be one of the factors driving long-term economic growth in Vietnam, now that the EU-Vietnam Free Trade Agreement has entered into force,” he added.