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International Business Report

Grant Thornton International Business report – Second half year 2019

27 December 2019 – Globally our report shows that despite talk of a slowdown in global economic growth and the more challenging economic environment, more than half the 10,000 businesses surveyed in our IBR reported revenue growth in excess of 5% in the first half of 2019. In Vietnam more than 70% of the firms interviewed have seen revenue grow by more than 5% in the last 12 months.

However, in H2 2019 the global optimism amongst respondents had fallen by 10% points from the first half of 2019, no doubt in part due to the trade tensions between the USA and China. In contrast optimism in Vietnam was the highest of all 30 countries surveyed (ahead of Indonesia, UAE and China), with expectations of higher revenues and profits both over 90%.

Expectations in terms of exports have also risen in Vietnam with 75% of respondents being positive compared to 66% in H1 2019. Vietnam of course has been one of the main beneficiaries of the USA – China trade tensions offering an alternative low cost producer without the tariffs levied on China.

Vietnam’s high rate of optimism is also reflected in the investment intentions, of those companies interviewed, with investment in new buildings ranking no 1 globally with 67% and no 2 behind Nigeria in plans to invest in Plant and Machinery (76%).

Globally 1 in 5 firms see economic uncertainty as a constraint to growth as well as 41% viewing shortage of orders as a key constraint. This is also reflected in the results for Vietnam with firms increasingly wary of prevailing risks. These include shortage of orders 51%, economic uncertainty 47%, regulatory red tape 54% and shortage of finance 54% all showing increases of 9-12% over the H1 report. There are also significant concerns expressed over the supply and cost of energy.

However one of the most significant concerns (46%) and the highest globally was rising labour costs and real wage increases. To those of us on the ground an all too familiar story.