HSBC lowers GDP forecast for Vietnam to 6.3 percent

By Le Chi   April 7, 2016 | 02:52 am PT
Vietnam’s economy is tipped to expand at 6.3 percent this year, according to an HSBC report on the country’s April market outlook, lowering its forecast from the previously projected growth of 6.7 percent.

The annual economic outlook is lower than previously expected due mainly to the fact that the country, which reported first-quarter gross domestic product figures last week, slowed during the first three months of the year to 5.6 percent.

Climate change that has led to the country's worst drought and salinity in 100 years has taken a heavy toll on the performance of the whole economy, according to the report.

In an effort to tighten spending, the government has also applied scores of administrative measures, including cutting credit growth. Companies faced with fund shortages have not been able to expand their business and investments, HSBC experts pointed out.

Although the Southeast Asian country’s economy is forecast to grow slower this year, Vietnam is still cementing its position as one of the ASEAN bloc’s top performers.

HSBC said the slowdown could be a positive thing for Vietnam since it provided a pause for Vietnam to adopt its macroeconomic adjustments. Vietnam in recent years has tried to boost economic growth at the expense of raging inflation.

Vietnam’s foreign exchange reserves, excluding gold, are expected to reach $33.6 billion by the end of this month, up from the IMF’s latest forecast of $29.9 billion.

Vietnam might further devalue the dong in 2016 to VND23,000 per dollar, said HSBC.


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