Vietnam’s Vulnerabilities: How Energy Dependence and Supply Chain Disruptions Squeeze Business
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Vietnam’s Vulnerabilities: How Energy Dependence and Supply Chain Disruptions Squeeze Business
Our latest report analyzes how the ongoing Strait of Hormuz crisis and rising energy prices are exposing structural vulnerabilities in Vietnam’s export-driven economy, with implications for manufacturing, supply chains, and regional geopolitical alignments. It also examines how Vietnam’s response to these pressures may reshape its economic and strategic positioning between China, Russia, and other Indo-Pacific partners.
Executive Summary
Vietnam's Hormuz exposure is multi-dimensional, and the government's ability to mitigate short-term impacts of the Strait’s closure, such as higher energy prices and fuel shortages, will decrease over time. As the crisis continues and energy prices remain high, a 1% to 2% economic contraction is likely.
Export-centered manufacturing sectors like electronics, textiles, and chemicals already have their profit margins squeezed, whereas fertilizer shortages affect harvests, food prices and wider economic stability.
A prolonged disruption will accelerate Vietnam's geopolitical dilemma: Pressures to reduce “Gulf dependency” risks drawing Hanoi (further) towards China and Russia, thereby creating both leverage and exposure for European, Japanese and South Korean stakeholders and investors.