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In the face of the rapidly changing situation in Ukraine, investors around the world are worried about its economic impact.
BIDV Securities Co., Ltd. (BSC) of Vietnam recently released a report that reviews the economic exchanges between Russia and Ukraine and Vietnam, and evaluates the impact of the situation between Russia and Ukraine on the Vietnamese economy in multiple dimensions.
In import and export exchanges, Russia and Ukraine are not important trading partners of Vietnam
According to the Ministry of Industry and Trade of Vietnam, the total import and export volume between Vietnam and Russia reached 7.14 billion US dollars in 2021, ranking 21st among Russia's major trading partners; among them, Vietnam's exports to Russia reached 48.9% (an increase of 20.9% year-on-year), mainly for mobile phones and parts products (33%), computers and their similar electronic products (13%), textiles (10%), etc.
Import and export trade data of Russia and Vietnam
In recent years, the total import and export volume of Vietnam and Russia has accounted for more than 1% of Vietnam's total import and export volume, so it is difficult for Russia to have a direct economic impact on Vietnam. Looking back at russia's military operations on the Crimean Peninsula in 2014, even if the economies of Russia, the United States and other countries received a strong impact at that time, the Vietnamese economy at that time, except for some slight changes in the prices of oil, aluminum, wheat, etc., other industries basically did not respond.
Import and export trade data of Ukraine and Vietnam
Vietnam has fewer economic contacts with Ukraine than Russia. In 2021, bilateral trade between Vietnam and Ukraine reached US$720 million, an increase of 50% over 2020, but only 0.1% of Vietnam's total imports and exports.
According to JPMorgan's report, Russia, as one of the world's main suppliers of raw materials, is the third largest oil exporter after the UAE and Saudi Arabia, with exports of fuel and energy products accounting for more than 63% of Russia's export structure, followed by metals and chemical products. However, these exports originating from Russia are not on Vietnam's main import list.
The situation in Russia and Ukraine affects the global economy and may have an indirect impact on Vietnam
Analysts at Ho Chi Minh City Securities Joint Stock Company (HSC) said that geopolitical factors, the impact of the situation in Russia and Ukraine is mainly in the Vietnamese stock market, as well as the rise in commodity prices.
The rise in energy prices caused by the Russian-Ukrainian conflict is predictable, and if oil prices continue to remain high at $80-90/barrel, then several petrochemical projects in Vietnam will also speed up the implementation of the project.
In addition, the price increase in the fertilizer industry and the steel industry will also become an inevitable trend.
Chemical and fertilizer industry share price changes Source: Fiintrade
Due to the implementation of the embargo, Russia, the second largest steel importer in the EU, will cause a temporary gap in the European steel market, while the EU still imposes import tax on importing countries (>3% will increase tariffs), and Vietnam currently accounts for 2% of EU flat steel imports. On the other hand, Russia, which accounts for 75% of the global supply of ammonium nitrate (NH4NO3), will have its move to ban the export of ammonium nitrate (NH4NO3) to drive up the global price of nitrogen fertilizers, and Vietnam may increase the export of fertilizers and keep the selling price high, but Vietnam's local animal husbandry and agriculture are bound to suffer some negative effects.
The fund manager from VinaCapital further analyzed that airlines may also be affected by rising oil prices and route disruptions, but the increase in macro risks in the world is bound to have an impact on vietnam's economic recovery momentum. It is recommended that investors maintain a rational and calm mood, and focus their investment targets on industries with long-term value and stable returns, such as banking, industrial real estate, infrastructure, marine energy and other industries, which have the potential for long-term sustainable development.
According to the above analysis, THE VIETNAM BIDV SecuritIES CO., LTD. (BSC) believes that the conflict between Russia and Ukraine will not have a significant direct economic impact on the situation in Vietnam, but because of its impact on the world economic situation, especially commodity prices, it may hinder Vietnam's economic recovery to a certain extent.