10:14 | 08/10/2018 Society
(VEN) - Standard Chartered Bank continues to expect Vietnam’s robust GDP growth of 7.0% in 2018, driven by strong FDI-supported electronics manufacturing and rising consumption. Manufacturing and agriculture are likely to remain the primary growth drivers in H2.
The forecast is highlighted in the Bank’s recently published Global Research report on Vietnam entitled “Vietnam – Fast, not furious, growth”.
Chidu Narayanan, Economist, Asia, Standard Chartered Bank, said: “Vietnam expanded 7.1% in H1, moderating mildly in Q2 after a record 7.4% growth y/y in Q1, in line with our forecast. This is the first year since the global financial crisis that Q2 growth has been slower than Q1; we believe this is a sign of a focus on sustainable growth over the medium term. We expect H2 growth to remain robust, albeit mildly slower than in H1”.
“Vietnam is likely to remain the fastest-growing ASEAN economy in 2018 and 2019, as in 2017.”
The Bank maintains its views that FDI inflows will stay strong in 2018 and 2019-20, with registered capital of close to USD 17bn each year, and FDI inflows to the manufacturing sector, particularly electronics manufacturing, will remain high in the medium term.
The study also expects steady growth in services to support overall growth in 2018, led by strong domestic trading activity. The services sector, which makes up close to 40% of the economy, is likely to remain robust in H2 after rising by a steady 7.0% y/y in H1. The rise of the business process outsourcing (BPO) sector, aided by a young, well-educated, low-cost labour force, should support services sector growth in the medium term.
On FX outlook, Standard Chartered economists raise their USD-VND forecasts to 23,400 by end-2018 and expect a small VND depreciation in early 2019, before ending 2019 mildly stronger against the USD as positive domestic and external factors support the currency.