ICAEW forecasts Vietnam’s GDP growth at 6.7 per cent in 2019

After enjoying GDP growth of 7.08 percent in 2018, the country’s 2019 growth is forecast at 6.7 per cent, which would place it as the fastest growing Southeast Asian economy, according to a report released by ICAEW Economic Update.

ICAEW forecasts Vietnam’s GDP growth at 6.7 per cent in 2019

Despite this, the nation’s economic growth is forecast to experience a decline during 2019 in line with other countries in the Southeast Asian region.

Regional GDP growth is expected to moderate to 4.8 per cent in 2019

The Economic Insight reports are produced by ICAEW's partner Oxford Economics, one of the world’s leading advisory firms that specialize in providing quarterly forecasts for economies in the SEA region including Indonesia, Malaysia, the Philippines, Singapore, Thailand, and Vietnam.

Accordingly, the region’s average GDP growth is forecast to moderate to 4.8 per cent this year, a drop from 5.3 per cent in 2018, due to a gloomy situation relating to export growth, increasing trade protectionism, and weaker import demands from China.

The report also pointed out that deterioration in export momentum across the region has carried on into the year’s second quarter, with Vietnam being the only nation to buck the trend.

The country’s merchandise exports in US$ terms stand at 10.4 per cent higher than a year ago during April. This was in spite of suffering a double-digit fall in crude oil exports. Despite this growth, the figure still marks a deceleration from the 13.3 per cent growth recorded in 2018.

Sian Fenner, Economic Advisor and Oxford Economics Lead Asia's economist, believes that exports and overall economic growth will continue to come under further pressure due to the renewed US-China trade tensions.

She noted that with a sharp fall in export volume since the beginning of the year, a further increase in the US-China trade tensions could see a much more prominent slowdown in regional growth in the future.

Mark Billington, Regional Director of ICAEW South East Asia emphasised that the re-escalation of US-China trade tensions comes at a time when export growth across the region is already in the doldrums due to weaker import demands from China.

He said the nation’s economy will still enjoy favourable growth in the context of trade diversion, noting that drastic measures should be taken to ensure a consistent inflow of FDI.

FDI remains significant driver to Vietnam’s economic growth

The report stated that Vietnam’s economy faces a number of challenges in terms of technology levels and the degradation of both land and natural resources.

 

In addition, there is a big difference in development levels between the domestic and foreign-invested sector. This is particularly true in import-export activities, which will have an impact on overall economic growth.

Despite these negatives, the report shows that there are bright prospects ahead for Vietnam’s economy in 2019 thanks to macro-economic stability, and improved levels of confidence in the country’s business climate. Therefore, FDI and manufacturing remain significant drivers of economic growth.

Vietnam’s economic momentum stood at 6.8 per cent year -on-year in the first quarter of 2019, below the 7.3 per cent rise seen in the fourth quarter of 2018. Growth in the quarter was underpinned by the continued strength of the manufacturing sector, solid activity within the service sector, and an improving agriculture output.

While US-China trade tensions may temporarily benefit Vietnam, the nation remains highly exposed to China. The country’s total exports to China in value added terms accounted for 10.3 per cent of GDP in 2017, of which around 85 per cent was used to meet domestic demand within China.

According to the Foreign Investment Agency, disbursed FDI picked up 9.8 per cent on-year to a three-year high of US$2.6 billion in the first two months of 2019, with the manufacturing and processing sector garnering the most interest from foreign investors.

The report pointed out that the FDI inflows remain strong over the medium term due to the country’s close proximity to China and a host of positive labour dynamics, including low relative wages.

In addition, Vietnam’s participation in trade agreements, notably as part of ASEAN, and policies to attract FDI are also favourable. The nation’s infrastructure metrics are also improving.

But structural reforms are needed to improve the ability of firms to do business in the country as well as ensuring adequate education and training enhance the scalability of production, notably in telecommunications, which is one industry in which the nation enjoys a comparative advantage.

A key finding of the report is that the demand remains healthy during the 2019−2020 period. Household spending will remain solid amid stable inflation and rising incomes, while sustained tourism should support the service sector.

ICAWE forecasts that the country’s GDP will grow by 6.7 per cent this year, with a modest deceleration during the 2020−2021 period to 6.1 per cent per year. VOV/ICAEW

Vietnam economy to grow at 6.7%: report

Vietnam economy to grow at 6.7%: report

The Vietnamese economy is expected to grow at around 6.7 per cent this year, the fastest rate in South East Asia, according to the Institute of Chartered Accountants in England and Wales’ recent report.  

Outlook for Vietnam’s economy remains sound in 2019: IMF

Outlook for Vietnam’s economy remains sound in 2019: IMF

The outlook for Vietnam’s economy remains sound, aided by its strong fundamentals, diversified trade structure and the authorities’ commitment to macroeconomic stability and private sector-led growth, according to the IMF.  

Global shocks pose threats to Vietnam's economy

Global shocks pose threats to Vietnam's economy

The Vietnamese economy faced further uncertainty due to the impacts of global shocks, according to the Viet Nam Institute for Economic and Policy Research (VEPR).  

 
 

Other News

.
Struggles forecast on ending earnings season, rally lock-in
Struggles forecast on ending earnings season, rally lock-in
BUSINESSicon  19/10/2020 

The market will struggle in the coming days as the third-quarter earnings season is near its end and investors will try to realise their profits following recent rallies.

Investors see agricultural processing sector as ripe for plucking
Investors see agricultural processing sector as ripe for plucking
BUSINESSicon  19/10/2020 

On September 27 construction of a US$66 million hi-tech agricultural complex began in the Central Highlands province of Dak Lak.

Russian locality hopes to boost trade ties with Vietnam
Russian locality hopes to boost trade ties with Vietnam
BUSINESSicon  19/10/2020 

The Udmurtia Republic, a federal subject of Russia, is planning a webinar on November 17 to promote its export and investment potential to Vietnamese businesses and agencies.

Boeing to bring more technologies to local airlines
Boeing to bring more technologies to local airlines
BUSINESSicon  18/10/2020 

To cope with the COVID-19 pandemic, Boeing has sped up its ecoDemonstrator programme to support its partner airlines, including those in Vietnam.

VN has been active as foreign companies plan investment relocation
VN has been active as foreign companies plan investment relocation
BUSINESSicon  18/10/2020 

Vietnam has been seen as an ideal destination for foreign companies looking for elsewhere to relocate production channels in a bid to diversify their supply chains in the post-Coronavirus pandemic.

Exploitable security plagues digitalisation
Exploitable security plagues digitalisation
BUSINESSicon  19/10/2020 

Disruptive technologies spur the evolution in the financial landscape, with comprehensive applications providing convenient access to customers’ banking needs.

New FTAs puts logistics in limelight
New FTAs puts logistics in limelight
BUSINESSicon  19/10/2020 

New-generation free trade agreements are increasing the importance of domestic logistics groups, with Vietnam emerging as a safe yet high-return market for overseas parties pouring money into new developments.

MoIT helps enterprises deal with increasing trade remedy cases
MoIT helps enterprises deal with increasing trade remedy cases
BUSINESSicon  17/10/2020 

Vietnam’s export goods face more trade remedies in the process of deep economic integration, so the Ministry of Industry and Trade has developed solutions for the situation.

ASEAN pushes forward with 5G connectivty cooperation
ASEAN pushes forward with 5G connectivty cooperation
BUSINESSicon  17/10/2020 

As ASEAN chair this year, Vietnam is playing a crucial role in further cementing joint activities within the bloc via boosting the application of high technologies to adapt to Industry 4.0, which is sweeping throughout the region.

Macadamia nuts ripe for billion-dollar expansion
Macadamia nuts ripe for billion-dollar expansion
BUSINESSicon  19/10/2020 

Vietnam wants to earn around $1 billion from growing macadamia by 2030, and although some plantations have achieved partnerships with domestic buyers, 

Real estate stocks await cash flow
Real estate stocks await cash flow
BUSINESSicon  17/10/2020 

Domestic and foreign capital flow is expected to bolster real estate shares after the COVID-19 pandemic as many investors are paying attention to the industry.

Online exports require professionalism
Online exports require professionalism
BUSINESSicon  17/10/2020 

Using online platforms to boost exports is the fastest way to bring Vietnamese goods to the world, said business leaders and industry experts.

Vietnam to become the 4th largest economy in Southeast Asia: IMF
Vietnam to become the 4th largest economy in Southeast Asia: IMF
BUSINESSicon  17/10/2020 

Vietnam's GDP is estimated to reach US$340.6 billion this year, making it the fourth-largest economy in Southeast Asia.

Long Thanh Airport: investment rate high, ACV may lack money
Long Thanh Airport: investment rate high, ACV may lack money
BUSINESSicon  19/10/2020 

The Ministry of Finance (MOF) has warned about problems with the Long Thanh International Airport project, citing capital arrangement capability.

The dark future of hotels on 'golden land' in Hanoi
The dark future of hotels on 'golden land' in Hanoi
BUSINESSicon  18/10/2020 

A series of hotels have had to cancel their opening plans this year because of Covid-19. Many hotels have been put up for sale because of poor patronage.

Special day for two billionaires: mountains of money pouring in
Special day for two billionaires: mountains of money pouring in
BUSINESSicon  18/10/2020 

Techcombank share prices have soared, while the Hoa Phat Group of the billionaire Tran Dinh Long has reported a record 30-year profit. The prosperity of these enterprises has helped their owners earn more money despite Covid-19.

Many hoteliers intend to divest capital due to heavy losses
Many hoteliers intend to divest capital due to heavy losses
BUSINESSicon  16/10/2020 

Over the past eight months, hotel room tariffs have plunged and hotel room occupancy rates have remained low, forcing several hoteliers to divest capital with many financially weak hotels in the local market being put up for sale.

Meeting expectations of the corporate bond market
Meeting expectations of the corporate bond market
BUSINESSicon  16/10/2020 

A new government decree tightens conditions on the issuance of corporate bonds. However, before the decree came into effect, enterprises flooded the market with new issuances.

M&A activities signal promising fortunes
M&A activities signal promising fortunes
BUSINESSicon  17/10/2020 

Although merger and acquisition levels dropped in 2020 across Vietnam, the prospect for such activities remain bright for next year as overseas investors look to local businesses in order to improve market access.

Thai billionaire, European brewer lose money in Sabeco investment deal
Thai billionaire, European brewer lose money in Sabeco investment deal
BUSINESSicon  16/10/2020 

The Sabeco price has seen a strong recovery in the last half a year, but is still at a low price. Both Thai billionaire and the big brewer Heineken have lost money because of the drop in Sabeco share price.

 
 
 
Leave your comment on an article

OR QUICK LOGIN