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In recent years, the turmoil in the global financial market has been playing out various dramas, among which the monetary policy of the United States has been the key lead.
With the advent of the U.S. interest rate hike cycle, global capital has begun to reshuffle.
And Vietnam, a star emerging in Southeast Asia, seems to be facing unprecedented challenges.
In the face of strong U.S. monetary policy, Vietnam's model of economic growth and external dependence has been severely tested.
Will it continue to rely on external funding to drive the economy, or will it be able to find a path of self-reliance?
This is the key issue facing Viet Nam.
Recently, the U.S. economic policy adjustment seems to be having a profound impact on Vietnam.
The U.S. interest rate hike is not just about controlling domestic inflation, but as a global strategy to redefine the dollar's position in the global economy.
Vietnam, a country that once attracted a lot of foreign investment through low-cost labor and a more relaxed financial environment, is now at a crossroads.
First, Vietnam's economic growth has been strong in recent years, but this growth has largely relied on external capital and technology.
With the U.S. raising interest rates and global capital flowing back to the U.S., Vietnam is facing pressure from capital outflows.
This has not only affected the expansion plans of local Vietnamese companies, but also posed a challenge to their foreign exchange reserves.
According to statistics, Vietnam's foreign exchange reserves have fallen from nearly US$120 billion at their peak.
Although this decline is partly due to market factors, it is more a direct result of the return of foreign capital.
Second, Vietnam's monetary policy and economic health as an export-driven economy are highly dependent on its export performance.
A stronger dollar means a relative depreciation of Vietnam's currency, which may increase the competitiveness of exports in the short term.
In the long run, however, it could lead to an increase in imported inflation, which could squeeze domestic spending power.
Data for the latest quarter showed that while Vietnam's exports grew by 5.4 percent, imports grew at a whopping 7.2 percent, indicating a deterioration in the terms of trade.
Against the backdrop of rising U.S. interest rates, another challenge facing Vietnam is the rising cost of corporate financing.
Many businesses in Vietnam, which have relied on low-interest loans to expand their production and operations, now need to rethink their financial structures and investment plans in a higher interest rate environment.
This undoubtedly increases the operational risk for those highly indebted businesses.
At the same time, Vietnam's financial market is not yet mature, which is a significant obstacle to attracting long-term stable foreign investment.
The high volatility of the market, coupled with the uncertainty of the legal and regulatory environment, has made foreign direct investment (FDI) more cautious.
According to the report, although Vietnam remains one of the hotspots for attracting foreign investment in Southeast Asia, the recent inflow of foreign investment has shown signs of slowing down.
This is partly due to increased uncertainty in the global economy and partly due to investors' wait-and-see views on long-term returns in the local Vietnamese market.
In terms of economic model, Vietnam is still highly dependent on external markets.
While this strategy has been successful in the context of global economic stability and deepening globalization, it exposes its vulnerability in the current global economic fluctuations.
Changes in U.S. trade policy, restructuring of global supply chains, and rising protectionism in other countries have all posed significant challenges to Vietnam's economy.
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