In a press briefing titled “What lies ahead in the Year of the Rooster?” experts from the Vietnamese branch of the Australia and New Zealand Banking Group Ltd outlined their views of the global and regional economy, as well as a detailed outlook for Vietnam in 2017.
They said the Vietnamese economy will experience higher growth this year with gross domestic production (GDP) growth about 6.4%, with the agricultural and industrial sectors doing well.
“We believe that Vietnam will lead the last industrialisation wave in Asia, leading the way for the Greater Mekong frontier. The opportunities that will open for Vietnam because of the transport corridor would be very significant. This corridor will provide the only land route connecting China and India to the rest of the ASEAN countries, and Vietnam’s geographical position will help it become a logistic hub of the region,” said Eugenia Victorino, ANZ Economist for Greater Mekong and ASEAN.
The bank sees the Regional Comprehensive Economic Partnership (RCEP) and the free trade agreement between Vietnam and the EU to make the country a very attractive FDI destination in 2017, benefiting from globalisation and the continuing shift of manufacturing and production.
“With President Trump pulling out of the Trans Pacific Partnership (TPP), the other countries’ response to the seeming end of the TPP is very important. The focus now should be the RCEP, which Vietnam is a part of, together with China and India. We expect it to at least offset the potential loss of the TPP to the Vietnamese economy,” said Khoon Goh, ANZ’s Head of Asia Research.
Vietnam’s export diversity and lack of dependence on any specific market will act as a buffer to the external risks faced by the rest of the region, the experts said.
ANZ expects growth in the US to pick up in 2017, allowing the Federal Reserve to increase interest rates around two times this year. The US fiscal policy under Trump’s presidency is likely to introduce a comprehensive tax reform package and a huge infrastructure spending programme. These policies, should they be implemented, would be very beneficial for both the US and global growth. However, these benefits will not actually be felt until 2018, especially for developing countries like Vietnam.
The ANZ experts also commented on how China had been the main driver of global growth with a large contribution to the global GDP, and said this would continue despite its growth rate slowing down to between 6 and 6.5 percent this year.
As China is a large trade partner for Vietnam, this also signifies growing trade potential for the country, according to the experts.