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HSBC keeps Vietnam's GDP growth at 6.5% for 2024, 2025

01 Oct '24
2 min read
HSBC keeps Vietnam's GDP growth at 6.5% for 2024, 2025
Pic: Adobe Stock

Insights

  • HSBC has maintained its GDP growth forecast for Vietnam at 6.5 per cent for 2024 and 2025, as economic recovery firms up.
  • It maintained its inflation forecasts at 3.6 per cent in 2024—well below the central bank's 4.5-per cent target—and at 3 per cent in 2025.
  • The domestic sector is recovering at a slower pace than initially expected, with retail sales growth still below the pre-pandemic trend.
HSBC has maintained its gross domestic product (GDP) growth forecast for Vietnam at 6.5 per cent for both this year and the next in a latest report, as the country’s economic recovery continues to firm up.

It maintained its inflation forecasts at 3.6 per cent in 2024, well below the State Bank of Vietnam’s target ceiling of 4.5 per cent. For 2025, it kept its inflation forecast at 3 per cent.

The report, titled ‘Asian Economics Quarterly—Comin’ for a landing’, said the country’s growth rose in the second quarter (Q2) this year by 6.9 per cent year on year (YoY).

The manufacturing sector has emerged strongly from last year’s problems. Purchasing managers' indices (PMIs) have registered five consecutive months of expansion, while industrial production has registered a bounce-back in activity for the textiles and footwear industry as well, a domestic media outlet reported citing the HSBC report.

However, the domestic sector is recovering at a slower pace than initially expected, with retail sales growth still below the pre-pandemic trend, HSBC noted. The government has implemented measures to back a wide range of domestic sectors that is expected to shore up confidence with time.

Environment tax cuts on fuel and value-added tax cuts for certain goods and services will last until year-end.

The bank showed its confidence that the potential upside risks can offset the temporary economic disruptions from Typhoon Yagi.

Price developments are turning more favourable in the second half this year, as unfavourable base effects from energy have faded. An expected US Federal Reserve easing cycle will also help to alleviate some exchange rate pressures.

Fibre2Fashion News Desk (DS)

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