Vietnam’s gross domestic product (GDP
) is likely to expand 6.6% this year, compared to 6.21% in 2016, with strong manufacturing growth and increased construction activity likely to remain the key growth drivers, Standard Chartered Bank
(StanChart) said at a briefing held in Ho Chi Minh City on Jan. 13.
Although 2017 is expected to be volatile year due to tightening financial conditions in the U.S. economy, StanChart remains upbeat about the outlook for Vietnam, which it believes is getting back on track after taking a hit from one of the worst droughts in decades in 2016.
“Most macro-economic indicators in Vietnam have improved in recent months, and progress continues to be made in establishing appropriate macroeconomic stability. We believe Vietnam will continue to be an attractive destination for investment,” said Nirukt Sapru, CEO of Standard Chartered Bank Vietnam.
StanChart forecasts Vietnam’s exports to increase only moderately, capped by still-slow demand from markets such as the U.S. and the EU. Meanwhile, inflation likely to pick up, averaging 4.3% this year.
The bank also foresees unchanged policy rates and a mild devaluation of the Vietnamese dong.
“We expect FDI
inflows in Vietnam to slow mildly in 2017 but still remain high, at close to $10 billion,” said Chidu Narayanan, economist for Asia at Standard Chartered Bank.
“Vietnam has benefited from its participation in regional trade pacts, which has helped to attract significant investment. We see minimal negative impact on Vietnam from the Trans-Pacific Partnership (TPP) potentially not going through, as FDI in anticipation of the TPP had been front-loaded,” the economist added.