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Standard Chartered raises growth forecast to 6.8%

Released at: 11:07, 09/10/2017

Standard Chartered raises growth forecast to 6.8%

Illustrative image (Source: cafebiz.vn)

Growth in electronics manufacturing to push up GDP, bank believes.

by Quang Huy

Standard Chartered Bank has raised its GDP growth forecast for Vietnam in both 2017 and 2018 to 6.8 per cent, the highest since the global financial crisis nearly a decade ago, from its previous projections of 6.4 per cent this year and 6.6 per cent next year, driven by faster-than-expected growth in electronics manufacturing.

The revision was made after Vietnam exceeded growth expectations in the third quarter, which took the figure to 6.4 per cent year-on-year for the first three quarters, well above expectations of 6.1 per cent.

“This would make Vietnam the fastest-growing ASEAN-6 economy in 2017, likely overtaking the Philippines,” the bank said in its “Vietnam - Turbo-charged Growth in Q3” report released on October 6. This is also the most bullish forecast by a foreign institution since the start of the year.

According to Standard Chartered, electronics export growth is likely to remain robust during the near term, driving a trade surplus and also supporting overall growth.

During the first nine months of this year, Vietnam’s exports rose 19.8 per cent year-on-year; the fastest pace in six years. While imports growth remained steady, rising 23 per cent year-on-year during the same period, the trade balance moved to surplus on the back of higher exports growth.

Disbursed foreign direct investment (FDI) during the January-September period was also higher than a year ago. With disbursement typically being higher in the fourth quarter, Standard Chartered forecasts disbursed FDI of close to $8 billion in the second half and over $20 billion for the year as a whole.

“FDI inflow is likely to remain robust in the medium term, primarily into the electronics manufacturing sector, keeping electronics manufacturing growth strong over the next few quarters,” it added.

The bank also raised its inflation forecast for Vietnam to 3.7 per cent in 2017 and 3.8 per cent in 2018, from 3.6 per cent and 3.7 per cent earlier, respectively, on the back of higher-than-expected inflation for this year and faster-than-expected GDP growth.

“Though we expect inflation to edge up to 3.8 per cent in 2018, it is likely to remain manageable, allowing the central bank to maintain its policy rate through 2018,” said Mr. Chidu Narayanan, Economist for Asia at Standard Chartered.

The Hong Kong-based bank HSBC earlier this week revised its growth forecast for Vietnam to 6.6 per cent in 2017 from the 6.0 per cent projected in July and the updated 6.2 per cent in September.

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