Econ
HSBC: Vietnam’s GDP to grow at 6.4% in 2018
The Hong Kong and Shanghai Banking Corporation (HSBC) reported Vietnam’s inflation rate in 2017 is 3.5%, which is in target of the State Bank of Vietnam being under 4%.
According to the report on Vietnam’s market prospect, HSBC expected GDP growth rate of Vietnam will be 6.6% in this year, and 6.4% for 2018. At present, Vietnam export is on the right track. Export in October grew 26% compared to the same period of last year, marking the third consecutive month with growth rate above 20%. Moreover, exporting smart phones and related accessories has significant increased, up 76% compared to last year.
Importing electronic devices, including material inputs for smart phones and related electronic products for export also increased. Meanwhile, manufacturing sector still maintain its significant contribution to GDP since the beginning of the year and continue growing.
However, The Vietnamese manufacturing sector experienced a slowdown in growth during October, with weaker rises in output, new orders and employment all recorded. That said, new orders continued to increase solidly amid faster growth of new export business. Meanwhile, there were signs that inflation may have peaked, with both input costs and output prices rising at broadly similar rates to the previous month. The Vietnam Manufacturing Purchasing Managers’ Index (PMI) – a composite single-figure indicator of manufacturing performance – dipped to 51.6 in October, from 53.3 in September.
On the other hand, inflation in October is under control but right now on pressure to increase due to fluctuation in oil price. The Consumer Price Index (CPI) increased 3% compared to the same period of last year, and is in line with the estimation of HSBC at 3.1%, thus keeping the inflation rate right under the SBV target of under 4% for 2017. It is expected that inflation rate for 2017 will be 3.5%.
Similar to previous months, increasing expenditure for healthcare services is the main reason for price increase. At the same time, oil price increase also put pressure for inflation rate to grow at the end of the year. However, the slight increase of oil price will keep inflation rate under control as target set up by SBV. HSBC expected inflation rate for 2018 will be at 3.5%.
With positive results of the economy, this will be an opportunity to continue pushing forward with mid term and long term strategies, such as the plan of economic restructuring, which will lay the foundation for transforming the economy from focusing on low added value sectors to high added value sectors, continue with administrative reforms, improving the business environment and actively adjusting price of goods and services under the state management. However, there remains shortcomings in the economy, such as the slow improvement in growth quality and national productivity, high public debt and non performing loans, slow rate in the equitization and divestment process of state owned enterprises.
As such, the driving forces of the growth is high consumption demand from domestic market, agricultural production and strong export-oriented manufacturing, and the services sector compensated for a contraction in the oil sector. Vietnam also have initiated measures to tackle problems in state-owned enterprise sectors, which will need to be sustained. On the other hand, Vietnam has been introducing measures to increase revenue mobilization and bring down its fiscal deficit.
Importing electronic devices, including material inputs for smart phones and related electronic products for export also increased. Meanwhile, manufacturing sector still maintain its significant contribution to GDP since the beginning of the year and continue growing.
However, The Vietnamese manufacturing sector experienced a slowdown in growth during October, with weaker rises in output, new orders and employment all recorded. That said, new orders continued to increase solidly amid faster growth of new export business. Meanwhile, there were signs that inflation may have peaked, with both input costs and output prices rising at broadly similar rates to the previous month. The Vietnam Manufacturing Purchasing Managers’ Index (PMI) – a composite single-figure indicator of manufacturing performance – dipped to 51.6 in October, from 53.3 in September.
On the other hand, inflation in October is under control but right now on pressure to increase due to fluctuation in oil price. The Consumer Price Index (CPI) increased 3% compared to the same period of last year, and is in line with the estimation of HSBC at 3.1%, thus keeping the inflation rate right under the SBV target of under 4% for 2017. It is expected that inflation rate for 2017 will be 3.5%.
Similar to previous months, increasing expenditure for healthcare services is the main reason for price increase. At the same time, oil price increase also put pressure for inflation rate to grow at the end of the year. However, the slight increase of oil price will keep inflation rate under control as target set up by SBV. HSBC expected inflation rate for 2018 will be at 3.5%.
With positive results of the economy, this will be an opportunity to continue pushing forward with mid term and long term strategies, such as the plan of economic restructuring, which will lay the foundation for transforming the economy from focusing on low added value sectors to high added value sectors, continue with administrative reforms, improving the business environment and actively adjusting price of goods and services under the state management. However, there remains shortcomings in the economy, such as the slow improvement in growth quality and national productivity, high public debt and non performing loans, slow rate in the equitization and divestment process of state owned enterprises.
As such, the driving forces of the growth is high consumption demand from domestic market, agricultural production and strong export-oriented manufacturing, and the services sector compensated for a contraction in the oil sector. Vietnam also have initiated measures to tackle problems in state-owned enterprise sectors, which will need to be sustained. On the other hand, Vietnam has been introducing measures to increase revenue mobilization and bring down its fiscal deficit.
