Economists still upbeat on Vietnam

‘The economy is likely to miss the government’s growth target of 6.7% for 2016. But we find cause for optimism in the coming quarters’, HSBC stressed in its report on Vietnam’s economy released last week.

“We think that growth will be closer to the 6% handle this year (our GDP growth forecasts are at 6.3% for 2016 and 6.6% for 2017), broadly in line with projections by the World bank, which earlier trimmed its 2016 projection to 6% from 6.2%’, said the report.

The Asian Development Bank (ADB) also stated in its update on Asia’s economic situation released in early August that ‘Vietnam’s growth forecast for 2016 is downgraded to 6.3% as the unexpected weakness in agriculture will likely keep the economy from achieving 6.7% growth. GDP growth in 2017 is still expected at 6.5%’.

Trading Economics, a world-renowned provider of economic analysis for governments and firms in nearly 200 countries, predicted that Vietnam’s GDP growth rate was expected to be 6.8% by the end of this quarter. The company wrote ‘Looking forward, we estimate the GDP growth rate in Vietnam to stand at 6.7 in 12 months time. 

In the long-term, Vietnam’s GDP growth rate is projected to trend around 6.9% in 2020’.

FocusEconomics, which features economic forecasts from the world’s leading economists, also expects Vietnam’s economy to rise 6.4% in 2016 and 6.6% in 2017.

The forecasts by HSBC, ADB, Trading Economics, and FocusEconomics are mostly based on Vietnam’s well-performing manufacturing and foreign direct investment (FDI) sectors.

For example, according to HSBC, as growth in the Vietnamese economy continues to outpace much of the region, FDI flows have been strong, in turn helping the economy capture a greater share of the global export market-even as global demand slows. 

Newly-registered and expanded FDI capital in the January-July period surged 47% year-on-year to US$12.9 billion. More than 1,400 FDI projects were licensed during the period, mostly in manufacturing processing, and real estate projects.

Meanwhile, Vietnam’s manufacturing sector activity continues to hold up well regionally. ‘The expansion seen in its manufacturing sector in July is still the strongest among the emerging Asian economies. Vietnam is also one of just a handful of economies still enjoying rising new orders’, HSBC stated.

Yoon Young Kim, newly-appointed country president of Schneider Electric Vietnam, Myanmar, and Cambodia, said that his firm now views Vietnam as ‘the fastest-growing economy in the Asia-Pacific region’.

Schneider Electric plans to expand both business and manufacturing capacity in the coming years in the country. A new plant is being constructed in Saigon High tech Park and will be ready for operation in early 2017.

‘We will continue hitting a double-digit growth rate this year’, Kim said.

Nguyen Anh Duc, assistant to the board of directors of International Telecommunications Investment and Commerce, told VIR that the firm’s seven-month revenue reached over VND200 billion (US$9 million), up 50% year-on-year.

It such revenue streams continue for the year as is expected, the company, which trades in telecommunication and electronic products, will enjoy a total revenue of over VND500 billion (US$22.72 million).

‘The company is going well, with enterprises’ confidence growing strongly. In the time to come, our company will continue expanding its markets and partner network’, Duc said.