HSBC raises GDP growth forecast for Vietnam to 6.5%

Vietnam's GDP growth jumped to almost a two-year-high of 6.9% in the second quarter, solidly beating HSBC and market expectations of 6.0%.

This means that Vietnam, at 6.5% growth, is likely to be the fastest-growing economy in ASEAN in 2024, a spot it lost to Malaysia and the Philippines in 2022 and 2023, respectively, the U.K.-based bank said in a report.

"Beyond the decent headline growth, what is more encouraging is that growth has started to show signs of broadening out," it said.

The manufacturing sector showed a "surprising" recovery with an expansion of 10%.

Sentiment among manufacturers has risen notably, with June’s Purchasing Managers’ Index rising sharply to 54.7 (a level above 50 shows expansion).

New export orders and employment rose to recent months’ highs, corroborating a benign outlook for Vietnam’s manufacturing sector.

Non-electronics shipments have started to show green shoots. In particular, exports of textiles and footwear, which are more exposed to the Red Sea disruptions, also bounced back to see double-digit growth.

HSBC also sees highlights in Vietnam’s long-term FDI prospects, especially in the sectors of manufacturing and real estate.

Outside of trade, tourism-related services continue to sustain the positive momentum. This explains why sectors including transport and accommodation have continued to shine.

In the first six months Vietnam attracted more than 8.8 million tourists, exceeding its 2019 levels.

The country is on track to reach its annual goal of welcoming 17-18 million tourists this year, the bank said.

Retail sales growth, however, has not returned to the pre-pandemic trend. Based on HSBC’s estimates, there is still a 10% gap below what the pre-pandemic trend would suggest.

"We believe Vietnam remains on track to see brighter growth prospects in 2024, if the recovery continues to broaden out," the bank said.