HSBC has revised its growth forecast for Vietnam this year up to 6.6 per cent, days after data from the General Statistics Office showed the economy grew 7.46 per cent in the third quarter year-on-year; its strongest third-quarter growth since 2010.
In a recent statement, the bank said that July-September growth was “surprising”. It had lowered its growth forecast from 6.4 to 6 per cent in July after the economy hit a three-year low of 5.2 per cent growth in the first quarter.
A continued rise in exports and industrial production were some of the primary drivers of growth, as the strong tech cycle in the second quarter persisted throughout the third quarter, the bank noted.
The composition of growth in July-September showed that the majority of the economy continues to perform well, with the exception of the mining sector. “We have previously noted that this mining drag has marginally slowed the country’s growth over the past few quarters and has negatively affected government revenues,” it added.
The report pointed out that the manufacturing sector’s contribution to growth has steadily climbed since the beginning of the year to reach its highest level in at least ten years. This is attributable to the expansion of Vietnam’s export industry over the years, particularly in the production of clothing, apparel, and electronics.
“We expect manufacturing to remain robust in the fourth quarter, albeit slowing slightly from a marginal drop in electronics exports, while services should remain steady on the back of strong tourist arrivals,” the bank said.
The positive outcome in the third quarter has driven overall growth for the first nine months to 6.41 per cent, the highest since 2015 but still below this year’s target of 6.7 per cent, one that both officials and industry insiders have lamented as being too ambitious.
From another perspective, the World Bank has said that Vietnam’s real GDP growth is projected to rise slightly, to 6.3 per cent this year, boosted by buoyant domestic demand, rebounding agricultural production, and strong export-oriented manufacturing.
Over the medium term, growth is going to stabilize at around 6.4 per cent in 2018-2019, it wrote in an October report, which also raised growth forecasts for other Asian economies including China, Malaysia, and Thailand.
In January it said that Vietnam’s economy would expand by an average of 6.3 per cent over the next three years, buoyed by strong foreign direct investment and manufacturing exports.
Vietnam recorded its highest GDP growth in five years in 2015, of 6.7 per cent, but growth then dipped to 6.21 per cent last year; the first slowdown in four years and amid low coal and oil prices as well as damage from a major drought and mass fish deaths caused by a pollution spill at the Taiwanese steel plant Formosa in north-central Ha Tinh province.
VN Economic Times