Vietnam’s GDP back on 7% track with manufacturing and services

Vietnam’s growth is exceeding expectations, prompting economists and researchers to revise forecasts for the nation in the near term, while remaining cautious due to fears of a global economic recession.

Vietnam’s GDP back on 7% track with manufacturing and services
Employees work at 29/3 Textile and Garment Company. Vietnam’s growth is exceeding expectations


Though economists had generally cast doubt on Vietnam’s ability to grow some 7% this year due to the economic slowdown continuing to spread across the globe, they were surprised by the 7.3% GDP growth year-on-year (y-o-y) at the end of the third quarter.

The General Statistics Office of Vietnam (GSO) reported that real GDP growth came in at 7.3% y-o-y at the end of September, up from 6.7% y-o-y in June.

Economist Yun Liu at HSBC Global Research said in her economics note for Vietnam that in a bumpy year like 2019 where an uncertain global economic environment has become the new normal, it was hardly imaginable that Vietnam, which is highly exposed to trade, could grow more than 7% as it did last year. It has even surpassed HSBC’s forecast of 6.6%, marking the fastest expansion in six quarters.

According to Liu, Vietnam’s resilient manufacturing sector lies at the center of the GDP growth.

“Despite growing at a moderate pace versus previous years, manufacturing saw ongoing steady double-digit growth of 11.7% in the three quarters. This is best illustrated in the industrial production (IP) release: manufacturing IP expanded 13.3% in Q3, much faster than the first half average of 7%,” noted Liu.

“Much of the fast growth was driven by the booming electronics sector, thanks to the continuing influx of FDI from tech companies.”

In addition, services have also been seen as the greatest contributor to Vietnam’s sustained high growth.

Expanding at the fastest pace in 2019 (7.1% y-o-y in Q3), the services sector continued to see steady growth, accounting for 40% of the headline GDP growth, according to Liu. This is partly thanks to stronger domestic consumption due to rising wages and the booming middle class.

Fitch Solutions Macro Research shared this view, pointing out that the acceleration in Vietnam was underpinned by the ongoing influx of companies from China amid the U.S.-China trade war, given that the manufacturing sector’s growth continued to outperform other sectors.

“In light of the strong Q3/19 growth print, we at Fitch Solutions are revising our forecast for real GDP growth to come in at 6.9% in 2019, up from 6.5% previously, and we maintain our 2020 growth forecast at 6.8%,” wrote the research and solutions provider.

Fitch Solutions’ adjustment coincides with HSBC’s forecast, which expects the local economy to expand at 6.9% for the year, with a focus on external headwinds that will take a toll on the country in the following year.

 

“We expect Vietnam to grow at 6.9% in 2019, before gradually decelerating to 6.4% in 2020,” stated HSBC.

Caution on the side

Despite the brighter revised projection, the country should not relax so soon as it is not entirely protected from the global economic slowdown.

According to HSBC, although widely seen as a beneficiary of U.S.-China trade tensions, Vietnam’s economy is highly dependent on global demand, especially mainland China, the United States and the European Union.

HSBC projections thus suggest that the growth of these major economies is likely to decelerate further, posing material risks to Vietnam’s trade and growth.

Meanwhile, Fitch Solutions claimed it has seen signs that the surge in companies relocating to Vietnam as a result of the U.S.-China trade tensions is putting increasing stress on the country’s infrastructure and labor force.

“We believe that these structural challenges, if left unaddressed, may cap growth over the coming quarters. This informs our view that these bottlenecks causing growth in the manufacturing sector will top out over the near term. That said, we believe that headline growth will remain supported by robust growth in construction and services over the coming quarters.” SGT

Trang Nguyen

Minister: Vietnam achieves highest GDP growth in nine years

Minister: Vietnam achieves highest GDP growth in nine years

Minister and Chairman of the Government Office Mai Tien Dung on October 2 affirmed that Vietnam has achieved the highest gross domestic product growth in the past nine years.

Int’l economists optimistic of Vietnam’s GDP growth

Int’l economists optimistic of Vietnam’s GDP growth

Economists are upgrading their growth projections for Vietnam after the latest data showed the economy surged more than 7 percent in the third quarter, according to Bloomberg.  

Vietnam's GDP in first three quarters climbs to 9-year high

Vietnam's GDP in first three quarters climbs to 9-year high

Local gross domestic product (GDP) climbed nearly 7 per cent in the first three quarters of 2019, reaching its highest level for the last nine years.  

 
 

Other News

.
Vietnam budget deficit forecast at 3.6% of GDP in 2021
Vietnam budget deficit forecast at 3.6% of GDP in 2021
FEATUREicon  12/01/2021 

Fitch Solutions holds a more optimistic view on Vietnam’s economic rebound in 2021, with its real GDP growth forecast at 8.6%, against the government’s 6.5% target.

Vietnamese ports on pace to post banner year
Vietnamese ports on pace to post banner year
BUSINESSicon  12/01/2021 

Vietnam’s port sector will flourish this year as trade in goods is expected to thrive on the back of recovery in production, domestic consumption, and export markets, according to industry analysts.

Bright future tipped for Vietnam’s e-commerce market
Bright future tipped for Vietnam’s e-commerce market
BUSINESSicon  12/01/2021 

Vietnam’s e-commerce market is forecast to continue growing strongly in the time to come thanks to a big population with high rates of young people and internet users.

Resolution on switching investment format of North-South Expressway’s component projects adopted
Resolution on switching investment format of North-South Expressway’s component projects adopted
BUSINESSicon  12/01/2021 

The National Assembly Standing Committee yesterday adopted a resolution on the switching of investment format of some component projects on Eastern North-South Expressway project in 2017-20 period, which failed to find investors through biddings.

UK trade deal gives Vietnamese consumers greater access to luxury goods
UK trade deal gives Vietnamese consumers greater access to luxury goods
BUSINESSicon  12/01/2021 

Tran Hung Khuong, owner of an automobile shop in HCM City’s Tan Binh District, said people could now save up to VND15 billion by buying a Rolls-Royce Wraith directly imported from the UK, thanks to the Vietnam-UK Free Trade Agreement (UKVFTA).

Da Lat’s largest flower village unusually quiet before Tet
Da Lat’s largest flower village unusually quiet before Tet
BUSINESSicon  12/01/2021 

Van Thanh, the largest flower village of Da Lat, is quiet these days, with no flower collectors, though Tet will start in one month.

2020: black credit pushes people to the wall
2020: black credit pushes people to the wall
BUSINESSicon  12/01/2021 

Black credit grew strongly in 2020 when many people lost jobs because of Covid-19 and faced financial problems.

Railways revenues take $57.4 million hit from COVID
Railways revenues take $57.4 million hit from COVID
BUSINESSicon  11/01/2021 

The Vietnam Railways Corporation has lost VND1.32 trillion (US$57.4 million) in revenues due to the COVID-19 pandemic and flooding in the central region.

Fitness chains, gyms face ups and downs during 2020
Fitness chains, gyms face ups and downs during 2020
BUSINESSicon  12/01/2021 

Prior to the pandemic, Lamita, a fitness studio chain, suspended its operation temporarily on January 4 because of unsettled internal conflicts.

Vietnam continues to move forward in 2021
Vietnam continues to move forward in 2021
BUSINESSicon  11/01/2021 

Dr Tran Thi Hong Minh, Director of the Central Institute for Economic Management, talks about Vietnam’s potential for economic development in 2021.

Where to invest your money in 2021?
Where to invest your money in 2021?
BUSINESSicon  11/01/2021 

Traditional investment channels such as stock or real estate markets are set to continue to be the focus for investors in 2021.

What scenario ahead for Vietnamese price market in 2021?
What scenario ahead for Vietnamese price market in 2021?
BUSINESSicon  11/01/2021 

Despite suffering a slowdown in production and business activities as a result of the impact caused by the novel coronavirus (COVID-19) pandemic, the Vietnamese economy enjoyed positive annual growth of 2.91% in 2020, according to economic experts.

Stock market 2021: Positives and risks
Stock market 2021: Positives and risks
BUSINESSicon  11/01/2021 

The stock market ended 2020 with diverse notes, from the selloff in Q1 which sent the VN-Index down to 660 points, the lowest in four years, to the recovery and strong rally, especially in Q4.

Amid favorable conditions, bank listings on the rise
Amid favorable conditions, bank listings on the rise
BUSINESSicon  11/01/2021 

In the context of favorable conditions on the stock market which saw the indices rising sharply over the past eight months, getting listed at the moment will give banks better valuation and make it easier for them to attract greater cash flows,

Insurance firms struggle to attract investors despite good performance
Insurance firms struggle to attract investors despite good performance
BUSINESSicon  11/01/2021 

Insurance companies performed well in Vietnam during the COVID-19 pandemic, but their shares have not attracted much attention from investors.

US newspaper: US, Vietnam working to resolve trade issues
US newspaper: US, Vietnam working to resolve trade issues
VIETNAM & WORLDicon  11/01/2021 

The Inside US Trade has published an article entitled “US, Vietnam working to avoid imposition of Section 301 tariffs”.

Shrimp exporters bring home 3.85 billion USD in 2020
Shrimp exporters bring home 3.85 billion USD in 2020
BUSINESSicon  10/01/2021 

Earnings from shrimp exports reached 3.85 billion USD last year, up 15 percent year-on-year despite difficulties caused by the COVID-19 pandemic.

Flexible, cautious monetary policy management bears fruit
Flexible, cautious monetary policy management bears fruit
BUSINESSicon  10/01/2021 

Vietnam’s economy was adversely affected by the COVID-19 pandemic in 2020, along with natural disasters and the impact of trade conflicts.

Government to have new policy on purchase of solar power soon
Government to have new policy on purchase of solar power soon
BUSINESSicon  10/01/2021 

At present, the cost of solar power panels has cooled down, so shortly, the MoIT would suggest the purchasing price of solar power without using feed-in tariffs (FITs).

Lotus silk in fight for survival as cost becomes King
Lotus silk in fight for survival as cost becomes King
BUSINESSicon  10/01/2021 

The year 2020 will go down in history for a host of reasons, one being that the COVID-19 pandemic shut borders that had long been open wide for trade.

 
 
 
Leave your comment on an article

OR QUICK LOGIN