HSBC raises Vietnam growth forecast to 7%

After third-quarter GDP exceeded forecasts despite the impact of Typhoon Yagi , HSBC raised its growth forecast for Vietnam from 6.5% to 7%.

HSBC’s latest update revised up its full-year growth forecast for Vietnam after the General Statistics Office reported that GDP grew 7.4% in the third quarter, despite the impact of Typhoon Yagi. The bank said the result was “stronger than expected,” beating its forecast of 6.2%.

Thus, HSBC's forecast is currently the highest among international organizations and is equivalent to Vietnam's target of 6.5-7%. Previously, many financial institutions continued to maintain or even raise Vietnam's growth forecast after Typhoon Yagi.

Specifically, ADB kept its forecast at 6%. The World Bank (WB) expected the growth rate to be 6.1%. Meanwhile, the International Monetary Fund (IMF) and UOB both raised their forecasts to new levels of 6.1% and 6.4%, respectively.

According to HSBC, after a difficult 2023 and the first quarter of 2024, Vietnam has returned to being the growth star of Southeast Asia. The results were led by manufacturing growth, with exports continuing to recover and spreading to more sectors, from electronics to textiles and footwear.

Although Typhoon Yagi is likely to have contributed to a decline in September export growth, the impact is not expected to be long-lasting. Manufacturing sentiment was recorded as positive for the future outlook as underlying demand remains strong.

Vietnam continues to attract foreign capital flows as fundamentals remain positive. Although newly registered FDI growth declined in the third quarter, sectors such as real estate and energy saw increased investment.

Going forward, capital flows into manufacturing are likely to remain stable during the visit of General Secretary andPresident To Lam to the US, according to HSBC. In addition, continuous efforts to strengthen relations with international partners will also create favorable conditions to attract more investment, such as Vietnam and France recently upgrading their relationship to a comprehensive strategic partnership.

In terms of inflation, price pressures are no longer as intense as before, although we need to monitor the lasting impact of Typhoon Yagi. With falling global energy prices and the global monetary policy cycle reversing, HSBC forecasts full-year inflation at 3.6%, below the State Bank of Vietnam’s target ceiling of 4.5%. Meanwhile, the policy interest rate is likely to remain at its current level of 4.5%.

Source: https://baoquangninh.vn/hsbc-nang-du-bao-tang-truong-viet-nam-len-7-3323726.html