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Grant Thornton International Business Report

International Business Report Q1 2024

Kenneth Atkinson OBE Kenneth Atkinson OBE

The world economy is steady but slow showing resilience. Low growth is expected globally in 2024.

Economic activity has continued to outperform expectations but remains subdued. We expect momentum to build in H2 2024. However, regional differences remain. Growth in Asia Pacific, Africa and the US is set to outperform the world economy, this year, while Latin America  and Europe will lag. Global inflation is expected to continue its decent from its 2022 peak, but sticky services inflation remains a concern in many economies. Growth is beginning to regain momentum. 

As was evident over 2023, two-thirds of businesses express optimism regarding the economic outlook of their respective countries. South America leads with 72% of businesses in the region optimistic for their economy, its highest scores since 2012. APAC achieved a record high for the region with an optimism score of 70%. Vietnam ranked 4th globally with 76% of respondents expressing optimism compared to 68% in H4 2023, behind Indonesia, India and China.

In terms of revenue growth Vietnam led the field globally with 87% of respondents expecting growth, up from 83% in Q4 2023.

Globally non-domestic market expansion increased in Q1-24 after H2- 23’s decline, returning to 2021 and 2022 levels. Notably, expectations for increased exports, non-domestic revenue and the number of countries sold to are significantly up from H2 2023. Whilst Vietnam ranked 5th globally it held joint top place in Asia Pacific joint 1st with Indonesia.

All regions expect increased non-domestic market expansion in Q1-24, with Asia Pacific leading the way with over 50% expecting an increase in exports in 2024 and over 45 % expecting an increase in number of countries sold to in 2024. Vietnam was well above the average for Asai pacific with 63% expecting an increase in exports and 53% expecting an increase in the number of countries sold to.

Over the last three years, businesses have consistently anticipated increased investment in Technology, People and R&D. Business outlook for 2024 also includes expectations for increased investment in brand and sustainable initiatives, to replace historical expectations of investments in plants & machinery and new buildings. Investment in people also continued to rank highly. In Vietnam investment in people was scored by 70% of respondents, putting them joint 4th globally, but this was down from 78% in Q4 23. Vietnam ranked 3rd globally for investment in R&D with 79% of respondents continuing to invest in this area and also 3rd for investment in technology as marked by 86% of respondents, in Vietnam.

Both the cost and availability of labour have become increasingly challenging for businesses in Q1-24, whilst Asia Pacific notes the size of the market and competition as key business constraints which speaks to a highly competitive market in the region. Vietnam seemed less concerned about availability of skilled labour and costs of labour with only 33% and 34%of respondents, respectively, expressing concern.

In summary, economic uncertainty will remain a core threat to business globally and thus a potential threat to Vietnam’s growth forecast as some of our major markets are much less optimistic about sustained growth in 24. However, Vietnamese companies continue to look for expansion in non-domestic and new markets, to invest in people as well as R&D and new technology which augers well for the future.