HSBC says Vietnam economy to grow at 7.9% this year

The British bank said in a report Tuesday that Vietnam "surprised the market" with growth hitting 8.2% in the third quarter, making it the fastest growing economy in ASEAN.

"This is the second quarter that Vietnam’s growth has exceeded 8%, easily beating market expectations."

Last month several financial institutions also raised their growth forecasts, with the Asian Development Bank and Singapore-based lender UOB adjusting it to 6.7% and 7.5%.

The International Monetary Fund and World Bank have forecast 6.5% and 6.6% growth.

While ASEAN member countries’ exports to the U.S. have seen sharp declines after frontloading activities faded, Vietnam’s trade performance remains strong at double-digit growth, HSBC said.

The size of its overall trade surplus in the third quarter doubled from the first half-year to US$3 billion.

"This indicates Vietnam has widened its trade surplus with trading partners other than the U.S., although the latter remains its biggest exporting destination with one-third of the total share."

Domestic retail sales grew by 12% year-on-year growth in the third quarter, while tourism flourishes with Vietnam leading the region in the sector’s recovery.

The government’s push for mega infrastructure projects has boosted construction activities, and foreign direct investment was up 15% year-on-year during the quarter.

HSBC also increased its projection for 2026 from 5.8% to 6.7%. It also raised the inflation forecast for this year from 3.2% to 3.3%, and expects it to top 3.5% next year.

Prime Minister Pham Minh Chinh said earlier this month that with the current growth momentum Vietnam could achieve its GDP growth target of over 8% this year if there are no major disruptions.

Surveys indicate that the business community is optimistic about the final three months of the year.

A survey of processing-manufacturing and construction enterprises by the General Statistics Office found 40.8% expecting fourth-quarter operations to be better, compared to a rate of 31.1% for the third quarter.

The European Chamber of Commerce in Vietnam’s third-quarter Business Confidence Index rose to 66.5 points, the highest in three years.