09:45 | 17/01/2019 Society
(VEN) - Standard Chartered Bank expects Vietnam to grow at a steady 6.9% in 2019, as the focus shifts to sustainable growth. FDI-driven manufacturing and stronger domestic activity is likely to support growth.
This forecast is highlighted at Standard Chartered’s Global Research Briefing held on January 16th, in Ho Chi Minh City, drawing senior representatives from over 120 local and foreign corporate clients. The annual event discusses Standard Chartered’s recently published Global Focus - Economic Outlook 2019 report entitled “Fighting the current”, and its latest Global Research report on Vietnam entitled “Vietnam in 2019 – Steady and Sustainable Growth”.
The event is part of the 2019 Standard Chartered Global Research Briefing series, which is organised by the Bank in major ASEAN cities to provide its clients in-depth insight and analysis on global, regional and local socio-economic trends that will have an impact on international business and trade in the year ahead.
“Most macro-economic indicators improved in 2018, interest and FX rates were kept stable despite the Fed’s hike in interest rates and US-China tension, and NPLs were well-managed below 3%. This has helped minimize market volatility, increase Vietnam’s export competitiveness relative to other ASEAN economies, attract FDI, and create public confidence towards SBV’s management capabilities and policies. We believe that the Vietnamese economy will remain one of the fastest growing in Asia and likely the fastest-growing ASEAN economy in 2019.” said Nirukt Sapru, CEO Vietnam and ASEAN and South Asia Cluster Markets, Standard Chartered Bank.
Chidu Narayanan, Economist, Asia, Standard Chartered Bank, said: “Vietnam recorded a 10-year high GDP growth rate of 7.1% y/y in 2018, in line with our forecast. 2018 was the first year since the global financial crisis that Q2 growth was slower than Q1, and Q3 slower than Q2; we believe this is a sign of focus on sustainable growth over the medium term. We remain positive on Vietnam’s medium-term growth on strong manufacturing activity as FDI inflows to electronics manufacturing remain strong”.
According to the latest macro-economic research report on Vietnam, the manufacturing sector has expanded by double digits for most of the past four years and this pace is likely to continue in 2019. The Bank expects manufacturing growth to remain strong this year, though mildly lower than in 2018 due to the high base and uncertain external environment. Still-strong FDI inflows to manufacturing will likely support robust manufacturing output. Standard Chartered economists forecast FDI inflows to stay strong in 2019 at close to USD 15bn and FDI inflows to the manufacturing sector, particularly electronics manufacturing, to remain high in the medium term.
The study points out that construction activity moderated through 2018, growing 8.9% in the full year, and construction growth, particularly in the real-estate sector, will continue to moderate in 2019, but expand at a still-strong 7.5%. Slower growth in the construction sector, which makes up close to 5% share of the economy, is likely to be offset by faster agriculture growth, which accounts for 12% share of the economy. Agriculture expanded 2.9% in 2018, the fastest pace in six years, and is likely to continue its recovery in 2019.
Some highlights of Vietnam in 2019 by Standard Chartered Global Research:
GDP to grow by 6.9%; Export growth to remain robust at 10% while import growth to stay below 10%, keeping the
trade balance in surplus; FDI inflows to remain strong at close to USD 15bn; Inflation averages 4.0% y/y; USD-VND
forecast at 23,100 at mid-2019 and 23,000 at end-2019.