German businesses in Vietnam are more confident about growth and have positive expectations about the country’s economic growth than they did in autumn 2022, according to a biannual survey.

The German Chambers of Commerce Abroad (AHKs) survey found 91 percent of German companies intending to expand in Vietnam and 40 percent planning to increase their workforce in the next 12 months.

But their short-term expectations remain cautious due to the geo-political challenges such as inflation and the increasing political influence on supply chains.

Eighty eight percent of the survey participants were confident about their business situation in Vietnam (satisfactory or good), and nearly half expected economic growth to remain steady, while 21 percent expected it to speed up.

Vietnam is expected to see a resurgence in economic growth in the medium term fueled by factors like free trade agreements, the global trend of shifting and diversifying manufacturing supply chains towards competitive hubs in Southeast Asia and the inflows of green investments.

Half of German companies in Vietnam prioritised diversifying their supply chains, with Vietnam being their top choice, followed by Malaysia and Thailand.