HSBC raises economic growth forecast for Vietnam

08:51 | 06/10/2017 Society

The Hong Kong and Shanghai Banking Corporation (HSBC) has raised its GDP growth forecast for Vietnam from 6.0% to 6.6%, for the whole 2017, and has predicted a 6.4% growth rate in 2018.

Industrial production has contributed to the strong economic growth

The adjustment was made following the spectacular GDP growth in Vietnam in the third quarter of this year.

The HSBC’s latest report on Vietnam's economic growth shows that Vietnam recorded an impressive GDP growth rate of 7.5% in the third quarter of this year and 6.4% in the first nine months of this year.

The statistics mark the first time since 2010 that Vietnam's economy growth rate has surpassed 7.5%, due to the increase of export activities and industrial production, the report stated.

In addition, the increasing number of foreign tourists to Vietnam and the advances of foreign direct investment (FDI), as well as agricultural production have also contributed to the strong economic development.

According to HSBC, the positive economic results in the third quarter have helped to reduce the burden on the Government and the State Bank of Vietnam (SBV) as the Government and the SBV have launched a number of measures to stimulate economic growth that may make the challenges to the economy more difficult.

The SBV cut several rates by 0.25% in July in order to boost economic growth, while the Government called for a credit growth rate from 18% to 21% to encourage investment and personal consumption.

HSBC stated that the move could create new risks for the banking sector if the new credit is allocated to less efficient industries. In addition, achieving the growth target of 6.7% for the whole 2017 will make it difficult for Vietnam to exceed its ceiling for public debt at 65% of the GDP, as set by the National Assembly.

The report also noted that there remain a lot of risks that will go along with Vietnam's economic growth in 2018, but challenges in this year have been reduced.

Vietnam's economy will continue to grow in the fourth quarter as the production, tourism, FDI and agriculture sectors continue to perform effectively and remain stable until the end of the year.

Theo NDO