Standard Chartered projects Vietnam’s GDP growth at 6.9% this year
Standard Chartered projects Vietnam’s GDP growth at 6.9% this year
Standard Chartered Bank on January 16 gave prediction that Vietnam's economy will expand by a steady 6.9% in 2019 as the focus shifts to sustainable growth. FDI-driven manufacturing and stronger domestic activity is likely to support this growth.
This forecast was highlighted at Standard Chartered’s Global Research briefing, held today in HCMC, drawing senior representatives from over 120 local and foreign corporate clients.
The annual event discussed Standard Chartered’s recently published Global Focus-Economic Outlook 2019 report, titled, “Fighting the current,” and its latest Global Research report on Vietnam, titled “Vietnam in 2019–Steady and Sustainable Growth.”
“Most macroeconomic indicators improved in 2018; interest and FX rates were kept stable despite the Fed’s hike in interest rates and the U.S.-China tensions; and nonperforming loans were properly managed below 3%. This has helped minimize market volatility, increase Vietnam’s export competitiveness relative to other ASEAN economies, attract FDI and restore public confidence in SBV’s management capabilities and policies," noted Nirukt Sapru, the bank's CEO of Vietnam and ASEAN and South Asia, in a statement.
"We believe that the Vietnamese economy will remain one of the fastest growing in Asia and likely become the fastest-growing ASEAN economy in 2019,” Nirukt Sapru said.
According to the latest macroeconomic 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 will stay strong in 2019 at close to US$15 billion, and FDI inflows to the manufacturing sector, particularly electronics manufacturing, will remain high in the medium term.
The study points out that construction activity, moderated through 2018 and growing 8.9% for 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, with an almost 5% share of the economy, is likely to be offset by faster agriculture growth, which accounts for a 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.
Standard Chartered Bank anticipates that the State Bank of Vietnam is likely to remain accommodating in the near term to support growth, even as inflation edges higher. It expects steady policy rates in 2019 and a mild appreciation of the Vietnamese dong, but sees a risk of policy tightening in the second half of 2019 as inflation rises.
The event was part of the 2019 Standard Chartered Global Research Briefing series, which is organized by the bank in major ASEAN cities to provide its clients with in-depth insight and analysis on global, regional and local socioeconomic trends that will have an impact on international business and trade in the year ahead.
