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Economic Sector

Last updated: Friday, June 22, 2018


HSBC: Vietnam's Economic Indicators Remain Positive

Posted: Monday, June 26, 2017

HSBC has affirmed in its latest report that operating conditions in the manufacturing sector - Vietnam’s bedrock - point to ongoing growth, with output, employment and new orders - both overall and overseas - continuing to expand.

However, the bank is concerned that a lull may be around the corner, as the rate of growth in these key components has slipped to multi-month lows. In addition, the manufacturers’ confidence receded to its lowest level in nearly four years, the report noted.

According to the HSBC, with headline PMI at 51.6 (down from 54.1 previously) in May, the rate of growth is at its weakest since March 2016. The underlying details are also less encouraging, as both output and new orders grew at a slower pace, and the decrease in growth of new export orders was particularly sharp. Similarly, even though hiring continued for the fourteenth straight month, the rate of employment growth is at its weakest since last July.

In the context of the Production Managers’ Index (PMI) being weaker than before, HSBC said this is not a pressing concern as other high frequency data, such as trade and retail sales remain resilient and robust.

Strong growth in retail sales and passenger car sales - a useful guide to domestic spending trends - have grown by an average of 12.4 percent annually, even though high taxes and fees offset by tariff cuts and have resulted in higher prices of cars, according to the report.

The real estate market is also recovering strongly with the aid of financing from banks, foreign investors, and overseas Vietnamese buyers, with Hanoi seeing 14 percent more successful deals in May than in April, while sales of apartments are also on the rise, by 5 percent monthly, HSBC analysts wrote.

Exports by the foreign-invested sector rose 28 per cent annually in May, from 17.2 percent in April, while the domestic sector posted 18.3 percent growth, up from 9.7 percent in April.

Exports of mobile phones and components, the country’s largest export items, grew at a staggering 39.8 percent annually (43 percent in April), due to the launch of new products recently.

Import growth also remained strong, at 26.8 percent annually in May, pushing the trade balance into deficit.


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