Published:  10:42 Tuesday - December 27, 2016

Tourism and travel are expected to contribute substantially to growth in trade in services and total export growth of Vietnam in the coming years, according to new research results which HSBC Commercial Banking released on December 22.

Although Vietnamese merchandise trade has long overshadowed services trade, the latter has considerable potential.

Trade in services in Vietnam focuses on tourism and travel. Given the country’s preferable geographical location, its tourist attractions and relatively low costs, Vietnam has become a favorite destination for international travelers.

The tourism-travel sector is expected to contribute the most to growth in services trade of Vietnam, accounting for 65% of total export growth of the country in 2016-2020 and 66% in 2021-2030.

The next most important services export after tourism is transportation and distribution, which is expected to contribute almost 20% to growth over the same period. The export of certain services like logistics, freight, and insurance has benefited from the strengthening manufacturing trade.

But while tourism and travel are expected to remain the top service export in 2030, a lack of marketing and development will limit their potential to be an even bigger driver of services export growth, according to HSBC report.

As economic and political headwinds slow global trade in commodities and manufactured goods, businesses that are seeking to boost sales through exports should explore opportunities linked to services.

Whilst the value of global merchandise exports has probably contracted by about 3% this year, cross-border sales of services such as tourism, banking, construction and software development have risen by 1% in nominal terms, according to HSBC’s Global Trade Forecast.

If governments refrain from introducing new impediments to trade, the value of global goods exports is expected to recover gradually to expand by 3% in 2017 and then 6% a year to 2030. Services, meanwhile, will attain average annual growth of 7% to contribute US$12.4 trillion to global trade flows in 2030, up from an estimated US$4.9 trillion this year.

In their analysis of bilateral trade between 25 key trading nations, HSBC and research partner Oxford Economics found that growth in services exports has outstripped growth in goods trade since the global financial crisis. This is partly down to spending on services being less affected by fluctuations in economic activity than spending on goods.