According to the report, the fundamental macroeconomic outlook for the ASEAN region remains reasonably positive in the context of global economic and political uncertainty.

 

Recent data point towards a pickup in trade for several economies such as Vietnam and Singapore, and ASEAN central banks may be able to adopt easing policy to support growth.

 

ASEAN economies are also vulnerable to a more generalized slowdown in globalization or an erosion of the broad consensus in favor of free trade. However, many economies in the region, including Vietnam, have been highly successful in moving up the global value chain as a result of the opportunities presented by free trade and investment flows.

 

Low oil prices and prolonged drought that affected agricultural production contributed to a slowdown in activity in Vietnam during the first half of 2016, said the report.

 

But the slowdown is limited thanks to strong industrial growth that continues to be boosted by FDI and a better business environment.

 

Indeed, FDI is on track for another record year in 2016 – attracted by low costs, improving infrastructure and skills and a deregulated business environment increasingly open to 100% foreign ownership, ICAEW said.

 

The report also said growth prospects for 2017 and 2018 are brightest in the Philippines and Vietnam.

 

“We expect growth to moderate to a more sustainable rate of 6% a year in 2017 and 2018,”

 

Priyanka Kishore, ICAEW economic advisor and Oxford Economics lead economist, was quoted as saying in a press release of ICAEW. She however added that although the Government has set out a number of projects aimed at promoting growth in short term, Vietnam still sees little fiscal stimulus possibility and significant increase in budget deficit.

 

What is going on shows that the success of Vietnam’s economy depends heavily on whether the country can continue to have more trade opportunities with economies having higher incomes, and access to financial resources and technological investments or not, she said.

 

Mark Billington, Regional Director of ICAEW South East Asia, said that in recent years, huge FDI flows have spurred the country’s economic growth.

 

Trade agreements play a key role as they are not only capable of directly promoting trade and investment flows, but also help bring good business practices to signatory countries.

 

Therefore, if the economic growth rate through those cooperation agreements shows signs of slowing down, the Government and businesses should look for alternative ways to improve the business environment, he said.