HSBC raises 2017 growth forecast for Vietnam, WB projects slight expansion

By Thanh Le, Anh Tu October 5, 2017 | 01:12 am PT

Vietnam has set an ambitious growth target of 6.7 percent this year. File photo

Strong growth in the third quarter may have put the country's annual target back within reach.

HSBC has revised up its growth forecast for Vietnam this year to 6.6 percent following record growth in the third quarter, while the World Bank estimated that growth will accelerate slightly from last year to 6.3 percent.

The forecasts came days after data from the General Statistics Office showed the Vietnamese economy expanded 7.46 percent in the third quarter compared to the same period last year, its strongest third quarter growth since 2010.

HSBC said in a recent statement that the July-September growth was “surprising”. The bank had lowered its growth forecast for Vietnam from 6.4 to 6 percent in July after the economy hit a three-year low of 5.2 percent growth in the first quarter.

This robust growth has been fueled largely by exports of Samsung cellphones and other electronic products, analysts said.

It has driven overall growth for the first nine months to 6.41 percent, the highest since 2015 but still below this year’s target of 6.7 percent, one that both officials and industry insiders have lamented as being too ambitious.

Vietnam recorded its highest GDP growth in five years at 6.7 percent in 2015, but growth dipped to 6.21 percent last year, the first slowdown in four years, amid low coal and oil prices as well as damage from a major drought and mass fish deaths caused by Taiwanese steel plant Formosa along the central coast.

The World Bank said Vietnam’s real GDP growth is projected to accelerate slightly to 6.3 percent this year, boosted by buoyant domestic demand, rebounding agricultural production and strong export-oriented manufacturing.

Over the medium term, growth is going to stabilize at around 6.4 percent in 2018-2019, the bank said in an October report, which also raised growth forecasts for other Asian economies including China, Malaysia and Thailand.

The World Bank in January said that Vietnam’s economy would expand at an average of 6.3 percent over the next three years buoyed by strong foreign direct investment and manufacturing exports.