Standard Chartered revises up Vietnam’s 2018 growth forecast to 7 percent

14:54 | 18/07/2018 Society

(VEN) - Standard Chartered Bank expects Vietnam’s rapid growth of 7 pct year on year in 2018, higher than its previous forecast of 6.8 pct, with all domestic engines firing together.

The forecast is highlighted in the Bank’s recently published Global Focus report for Quarter 3 2018 entitled “Fattening tail risks”.

Manufacturing and construction are likely to remain the fastest-growing sectors.

“We are positive on Vietnam’s growth medium-term on strong manufacturing activity as FDI inflows to manufacturing remain strong. We believe that Vietnam will remain one of the fastest growing economies in Asia in 2018.” said Chidu Narayanan, Economist, Asia, Standard Chartered Bank.

According to the latest macro-economic research report, FDI inflows are set to remain high in 2018, led by manufacturing, which makes up close to 50 pct of inflows. Implemented FDI rose to US$6.75bn in January-May, higher than the year-ago period. The Bank expects both registered and implemented FDI to be close to US$15bn in 2018, unchanged from the previous forecast.

Standard Chartered economists also forecast a mild trade surplus for the rest of the year on strong export growth and slowing import growth. Electronics exports are likely to remain robust in 2018 on strong demand for components, particularly OLED displays used in mobile devices, and expected to grow by over 20 pct in 2018.

The study also suggests that the State Bank of Vietnam (SBV) is likely to remain accommodative in the near term to support growth, despite rate hikes from major central banks. Standard Chartered Bank expects unchanged policy rates in 2018 and a mild devaluation of the Vietnamese dong (VND). Specifically, the Bank anticipates a mild move higher in USD-VND in the quarters ahead and revised up its USD-VND forecasts to 22,950 for end-Q3-2018, and 23,000 for end-2018.

My Phung