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Standard Chartered forecasts 2018 growth of 6.8%

Released at: 18:25, 18/01/2018

Standard Chartered forecasts 2018 growth of 6.8%

Photo: Hong Nhung (VET)

Manufacturing to be primary driver of continued high growth, according to bank's latest report.

by Khanh Chi

Standard Chartered Bank expects Vietnam’s economy to continue performing strongly and grow 6.8 per cent this year, buoyed by still-strong manufacturing activity.

The forecast was highlighted at a Standard Chartered Global Research Briefing held on January 17 in Ho Chi Minh City, attended by senior representatives from more than 100 of its local and foreign corporate clients. The annual event discussed Standard Chartered’s recently-published Global Focus - Economic Outlook 2018 report entitled “Beware of the Dog” [a reference to 2018 being the Year of the Dog] and its latest global research report on Vietnam, entitled “Vietnam in 2018 - Fast or Furious?”.

“Most macroeconomic indicators in Vietnam improved in 2017, which helped to minimize market volatility, increase export competitiveness relative to other ASEAN economies, attract foreign direct investment (FDI), and create public confidence in the State Bank of Vietnam’s management capabilities and policies,” Mr. Nirukt Sapru, CEO Vietnam and ASEAN and South Asia Cluster Markets at Standard Chartered Bank, told the gathering. “We are confident that Vietnam’s economy will remain one of the fastest growing in Asia in 2018.”

“Vietnam recorded nine-year high GDP growth of 6.8 per cent in 2017, in line with our forecasts and exceeding consensus expectations,” said Mr. Chidu Narayanan, Economist, Asia, at Standard Chartered Bank. “We are positive on Vietnam’s growth medium-term on strong manufacturing activity, as FDI inflows to electronics manufacturing remain strong.”

Manufacturing is likely to expand in the double digits in 2018, according to the macroeconomic research report, supported by still-strong FDI inflows and robust global demand for electronics. Electronics export growth is projected to remain robust near-term, leading to a trade surplus and supporting overall growth.

The bank forecasts FDI inflows to remain strong this year, at close to $15 billion, and for inflows to the manufacturing sector, particularly electronics manufacturing, to remain high in the medium term.

“Vietnam has benefited from its participation in regional trade pacts, a young and educated population, a cheap and growing labor force, and geographical proximity to China, which should see it continuing to attract strong FDI inflows over the medium term,” Mr. Narayanan added.

The report also expects steady growth in services to support overall growth, led by strong domestic trading activity. The services sector, which makes up close to 40 per cent of the economy, rose by a robust 7.45 per cent in 2017; the fastest since the global financial crisis. Construction should also continue to increase this year and see growth of slightly below 10 per cent, after a moderate slowdown in 2017.

The briefing was part of the 2018 Standard Chartered Global Research Briefing series, organized by the bank in major ASEAN cities to provide 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.

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