Update: 09:22 | 08/10/2018
Vietnam is likely to remain the fastest-growing ASEAN economy in 2018 and 2019, as in 2017, stated a new report released by Standard Chartered.
The Vietnam Economic Times quoted the report, entitled “Vietnam - Fast, not furious, growth,” by the British multinational banking and financial services company, forecasting robust GDP growth for Vietnam at 7% in 2018 and 6.9% next year, driven by strong FDI-supported electronics manufacturing and rising consumption.
According to Standard Chartered, Vietnam's manufacturing sector is expected to see a second consecutive year of double-digit growth this year.
Manufacturing and agriculture are likely to remain the primary growth drivers in the second half of the year, the report added.
Chidu Narayanan, economist for Asia at Standard Chartered Bank, said that Vietnam expanded by 7.1% in H1, moderating mildly in Q2 after a record 7.4% year-on-year growth in Q1, in line with the bank’s forecast.
“This is the first year since the global financial crisis that Q2 growth has been slower than Q1. We believe this is a sign of a focus on sustainable growth over the medium term. We expect H2 growth to remain robust, albeit mildly slower than in H1,” Narayanan said, adding that the bank remains positive on Vietnam’s growth in the medium term based on strong manufacturing activity, as FDI inflows to electronics manufacturing remain strong.
According to the latest report, manufacturing is predicted to record another year of double-digit growth and agriculture growth will continue its recovery in the second half, even as construction slows down due to more modest growth in the real estate sector.
Meanwhile, electronics export growth in 2018 is likely to remain robust, though lower than last year, leading to a trade surplus and supporting the overall growth of Vietnam.
The bank maintains its view that FDI inflows into Vietnam will stay strong in 2018 and the next two years, with a registered capital of US$17 billion each year. FDI inflows to the manufacturing sector, particularly electronics manufacturing, will remain high in the medium term.
The macroeconomic report also expects steady growth in services to support overall growth in 2018, led by strong domestic trading activity. The services sector, which makes up close to 40% of the economy, is expected to grow strongly in the second half, after rising by a steady 7% year-on-year in the first half.
The rise of the business process outsourcing (BPO) sector, aided by a young, well-trained and low-cost workforce, will accelerate the growth of the service sector in the medium term, the document stated.