Despite near-term trade headwinds, tourism has emerged as a source of growth that will mitigate some of the challenges in 2023, according to an HSBC report released on January 6.

While some challenges, especially in trade, have already materialized there remain pockets of resilience. A main source of growth will be tourism. Following Vietnam’s re-opening last March, domestic tourism roared back, easily surpassing the 2022 target of 60 million and hitting 100 million.

However, the rebound in international tourism was only partial, with arrivals standing at 3.6 million, just 20 per cent of the level in pre-pandemic 2019. This highlights the notable space available for the services sector to continue to flourish amid a global slowdown in goods demand. For 2023, the government is targeting 102 million domestic tourists and 8 million international visitors, with tourism receipts expected to rise by more than 30 per cent.

In addition, there is good news in mainland China, the largest source of visitors for Vietnam prior to the pandemic, which has recently begun its re-opening process. Given that China holds a 30 per cent share of tourists, Vietnam is likely to be another beneficiary, after Thailand, and see a boost in Chinese visitors.

According to HSBC, if flight constraints can be resolved and visa entry requirements eased further, a 50-80 per cent return of Chinese tourists is achievable.

While Vietnam’s tourism sector is overshadowed by its manufacturing success, there is significant space for growth. To unlock its potential and increase its appeal, tackling flight constraints with major markets and easing visa requirements are two key issues. Vietnam has also made efforts to expand accommodation options and diversify tourism offerings to further boost tourist inflows.