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Monday,  May 21,2018,02:45 (GMT+7)

Standard Chartered puts Vietnam’s growth at 6.8% this year

Thu Nguyet
Friday,  Jan 19,2018,14:54 (GMT+7)
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Standard Chartered puts Vietnam’s growth at 6.8% this year

Thu Nguyet

File photo of a textile equipment exhibition in HCMC. Standard Chartered Bank has forecast Vietnam’s economy will grow by a solid 6.8% this year - PHOTO: TL

HCMC – Standard Chartered Bank has forecast Vietnam’s economy will grow by a solid 6.8% this year, buoyed by strong manufacturing activity, heard a global research briefing in HCMC on January 17.

The annual event discussed the bank’s newly-released Global Focus – Economic Outlook 2018 report titled “Beware of the dog” and its latest Global Research report on Vietnam titled “Vietnam in 2018 – Fast or furious?”.

Nirukt Sapru, the bank’s CEO for Vietnam, ASEAN and South Asia Cluster Markets, said the majority of macro-economic indicators in Vietnam improved last year, thereby minimizing market volatility, improving Vietnam’s export competitiveness, attracting foreign direct investment (FDI), and creating public confidence in the State Bank of Vietnam’s management capabilities and policies.

“We are confident that the Vietnamese economy will remain one of the fastest growing in Asia in 2018,” he said.

Vietnam recorded a nine-year-high gross domestic product (GDP) growth rate of 6.81% year-on-year in 2017, in line with the bank’s forecast and exceeding consensus expectations, said Chidu Narayanan, an economist in charge of Asia at the bank.

The economist added Vietnam has benefited from its participation in regional trade pacts, its young and educated population, its cheap and growing labor force, and its geographical proximity to China, which should further attract strong FDI inflows over the medium term.

Its latest macro-economic research report on Vietnam forecasts the manufacturing sector is likely to expand in double digits this year, supported by still-strong FDI inflows and robust global demand for electronics.

Electronics export growth is projected to remain robust in near term, leading to a trade surplus and supporting overall growth. Therefore, the bank predicts FDI inflows will stay strong this year at roughly USS15 billion and the inflows to the manufacturing sector, particularly electronics, will remain high in the medium term.

The study also expects steady growth in the services sector which will stimulate the overall growth, led by strong domestic trading activity. The sector making up around 40% of the economy rose by a robust 7.45% year-on-year last year, the fastest since the global financial crisis.

Besides, the construction sector is expected to continue expanding this year, and see a growth rate of slightly below 10%, after the moderate slowdown in the full-year 2017.

Eddie Cheung, a FX strategist of the bank in China, said at the briefing that the Vietnamese dong currency was relatively undervalued against the U.S. dollar. He predicted the dong is expected to increase this year against the dollar.

The rate would be VND22,650 a dollar in the second quarter, and VND22,600 by the end of this year, according to the bank’s forecasts.

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