Vietnam’s exports show signs of improvement: HSBC

The report outlines that while textiles and footwear remain sluggish, other shipments such as computer related parts and machinery are showing sustained and encouraging signs with respective rises of 20.2% and 5.0%, albeit in part due to favorable base effects.

New areas with export growth potential, such as agricultural products, also continued to show signs of strength in support of a modest improvement towards year-end.

However, HSBC experts remain cautious about the trade prospects, as demand for goods in major trading partners is challenging. In fact, manufacturing PMI contracted further to 47.3 in November, with both output and new orders in contraction.

Meanwhile, domestic activity continues to be a firm pillar for the penultimate month of the year.

Indeed, the relaxation of visa policy since August has driven a sustained recovery in international tourists, with November welcoming over a million tourists for the fifth consecutive month.

With 11.2 million arrivals since the beginning of the year, the revised target of receiving between 12 million and 13 million visitors for 2023 looks to be comfortably secured.

However, the recovery of Chinese tourists appears to have plateaued, only rebounding to 30% of 2019’s level while the competition for tourism in ASEAN is set to intensify.

After Thailand’s visa exemptions for Chinese and Indian tourists, Malaysia is the next to have followed suit.

Elsewhere, headline inflation rose only 0.2% month-on-month, leading to a moderation in year-on-year inflation to 3.4% in November.

While domestic rice prices continued to face spill-over pressures from elevated international prices, falling pork prices have more than offset the former’s rise.

Meanwhile, lower oil prices have also kept a lid on inflation. But the most notable development in November is the first momentum rise in medical costs in four years, as a result of the changes in national medical service pricing, according to HSBC.

Think tanks pointed out that for the State Bank of Vietnam (SBV), signs are positive as inflation looks controlled and the economic outlook, especially on the external front, is stabilizing to a degree.

But that does not mean that upside risks to prices have dissipated. Vietnam Electricity, the state-owned utility company, raised its power prices by 4.5% in November, which typically is reflected with a one-month lag in CPI, to accommodate the diminished hydropower production due to the El Nino phenomenon.

HSBC economists emphasized that while keeping attuned to upside risks such as from food and energy prices, the SBV is advised to keep the policy rate steady at 4.50% throughout 2024.