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In the latest report named “Vietnam at a glance”, HSBC predicted that Vietnam will not be able to avoid the effects of slower global growth in 2020 and reforms are needed to sustain growth.

HSBC: Vietnam Faces to Higher Inflation and Lower Growth Prospect in 2020
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With yearly GDP growth of 7.0% y-o-y in 2019, Vietnam is
poised to be the fastest growing economy in ASEAN - again
Despite a rosy picture, the economy is facing some
challenges; we expect growth in 2020 to ease to 6.6% y-o-y
To buttress growth in the coming years, a continued, rigorous
pursuit of structural reforms is needed
Bright economic outlook. In a challenging year like 2019, Vietnam weathered
through risks with strong GDP growth of 7.0% y-o-y. Its outstanding performance
stems from both of its robust manufacturing and steadily-expanding services sectors.
On one hand, trade diversion and consistent FDI inflows have supported a resi lient
manufacturing sector. On the other hand, strong domestic consumption and booming
tourism have fuelled strong growth in services. In addition, some domestic risks were
better contained compared to previous years. HSBC expects these positive
developments to continue in 2020.
Persisting risks. That said, risks to growth are likely to persist in 2020. For one,
despite inflation moderating to a three-year-low in 2019, the recent surge in pork
prices poses upward pressures to inflation in 2020. This could not only complicate
the SBV’s eas ing s tance, but also constrain the government’s efforts at its healthcare
reforms. HSBC now forecasts inflation to rise to 3.8% y-o-y in 2020 and the SBV to
deliver a 25bp rate cut in 3Q20. Meanwhile, Vietnam would not be immune to a
possible global growth deceleration in 2020. In fact, recent signs have shown some
moderation in its manufacturing sector.
Reforms in need. Thus, continued reforms are needed in 2020 to tackle challenges
ahead and support growth. Some of the urgently needed reforms include the revised
PPP Law, adoption of Basel II standards for all banks and improvement in data
releases. HSBC notes that upward revisions of historical GDP for 2010-17 were recently
released, which have profound implications for various key indicators, such as the
public debt-to-GDP ratio.

DIEP NGUYEN