HSBC Positive about Vietnam’ Economic Growth Potential

Diep Nguyen

08:20 02/04/2019

BizLIVE -

High frequency indicators point to green shoots of recovery, despite challenges ahead; HSBC expects full year growth of 6.6% in 2019.

HSBC Positive about Vietnam’ Economic Growth  Potential

Photo: Metro

HSBC in the latest report named “Vietnam at a glance” remarked that GDP growth moderated to 6.8% y-o-y in the 1Q2019 from 7.3% in the previous quarters, but the economy remains broadly robust.
Manufacturing activity appears to be holding up despite external headwinds while domestic consumption remains solid.
High frequency indicators point to green shoots of recovery, despite challenges ahead; HSBC expects full year growth of 6.6% in 2019.
In a recent article, Nikkei said that Vietnam benefits from the trend of foreign investors flee China because of trade war tariffs. The U.S. trade war with Beijing continues to boost the Vietnamese economy as companies dodge tariffs by relocating production here from mainland China, fueling a sharp increase in exports to America.
Though January-March growth slowed from the 7.31% rate in the previous quarter through December, that period capped a full year when the economy grew by 7.08%, the largest annual expansion since the global economic crisis hit in 2008.
Exports to the U.S., the country's largest trading partner, jumped 26% on the year in the first quarter. Apparel performed particularly well as textile companies move operating sites to Vietnam from China, echoing a trend in other industries. Exports to China dropped by 7% amid the northern neighbor's economic slowdown.
The Sino-U.S. trade war will lift Vietnam's economic output by about 0.5 percentage point, the largest margin among Asian countries, Mizuho Research Institute predicts.
"Even if the global economy slows down, relocation from China will continue, and we can expect an offsetting effect to a certain extent," said Hiromasa Matsuura, an economist at the institute.

DIEP NGUYEN

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