Standard Chartered forecasts Vietnam to remain the fastest-growing ASEAN economy in the near term, with 2019 growth projected at 6.9 percent.
Rice loaded for exports. (Source: thoibaotaichinh.vn)
The FDI-driven manufacturing sector, which is poised for a fourth consecutiveyear of double-digit growth, will continue to be a key growth driver.
The forecast is highlighted in the bank’s recently published Global Focus –Economic Outlook report for Quarter 3, 2019 entitled “The dovish wave grows”.
“Vietnam’s growth prospect remains strong, with macro-economic conditionsstaying stable in the first half of the year which is likely to continuetowards year-end. We expect growth to accelerate mildly in the secondhalf from 6.7 percent in the first half,” said Chidu Narayanan, Economist,Asia, Standard Chartered Bank.
According to the latest macro-economic research report, FDI inflows will stayrobust this year, particularly to the manufacturing sector, totalling 18billion USD.
Vietnam’s export growth is likely to remain steady and outperform peers.Electronics exports, which make up about a third of the total, are likely to beless supportive than in recent years due to slowing external demand and lowersemiconductor prices.
Improving ‘traditional’ exports –textiles and agriculture – should continue to take up some of the slack. Importgrowth is expected to remain close to 10 percent on slowing capital-goodsimports; this should keep the trade balance in surplus in 2019.
The study also suggests that the State Bank of Vietnam will remainaccommodative in the near term to support growth, with still-modest inflationgiving it sufficient space.
Standard Chartered forecasts thatinflation will pick up modestly in the last six months of the year, averaging2.8 percent in comparison to 2.6 percent in the first half of the year and coreinflation, which excludes prices of food, energy, health care and educationservices, will edge up to 2 percent in 2019.
Standard Chartered’s economists expect unchanged policy rates in 2019 and mildappreciation of the VND. They anticipate that VND shouldremain supported near-term by a stable current account surplus and strong FDIinflows and forecast USD/VND at 23,100 at end-2019 and 23,000 inmid-2020.