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Economic Sector

Last updated: Tuesday, November 20, 2018

 

Vietnam Continues as Fastest Growing ASEAN Economy in 2018

Posted: Tuesday, October 30, 2018


Standard Chartered Bank maintained its economic growth forecast for Vietnam at 7 per cent in 2018, driven by strong foreign-invested electronics manufacturing and increased consumer spending. Manufacturing and agriculture will continue to be the main driver of growth in the second half of this year.

This forecast is given in the Vietnam Economic Report: "expanded 7.1 per cent in first half of the year, moderating mildly in the second quarter after a record 7.4 per cent growth year-on-year in the first quarter," said Mr Chidu Narayanan, Economic Advisor for Asia, Standard Chartered Bank, “which is in line with our forecast.” Since the global economic crisis has erupted this year, it is the first year that the second quarter growth was slower than the first quarter. We believe this sign shows a focus on sustainable growth in the mid-term. We expect economic growth in the second half of the year to continue to be robust, although slightly slower than the first half."

"Vietnam is likely to continue to be ASEAN's fastest growing economy in 2018 and 2019 - the same as 2017. We are optimistic about Vietnam's growth prospects in the medium term thanks to strong production and a high flow of FDI into electronics."

According to the economic report, the manufacturing sector is expected to see a second consecutive year of double-digit growth this year and growth in the agricultural sector will continue to recover in the second half of the year. At the same time, the construction sector slowed down due to low growth in real estate. Exports of electronics in 2018 are expected to grow strongly, albeit lower than in 2017, giving Vietnam a trade surplus and supporting the overall growth of the economy. Standard Chartered Bank maintains that FDI inflows into Vietnam will be high in 2018, 2019 and 2020, with a registered capital of US$17 billion per year, and FDI will continue to flow into the electronic production sector in the medium term.

The report also identifies stable growth in the service sector, led by strong domestic trade, which will support the overall growth of the whole 2018. The service sector, which contributes nearly 40 per cent to the economy, is expected to grow strongly in the second half of the year, after a 7 per cent increase in the first half. The development of the business process outsourcing (BPO) sector, backed by young, well-trained, and low-cost human resources, will accelerate the growth of the service sector in the medium term.

Regarding foreign exchange prospects, Standard Chartered experts raised the exchange rate forecast to VND23,400 per USD by the end of 2018, and it is expected that the dong will depreciate slightly in early 2019 before rising slightly against US dollars at the end of 2019 thanks to the support of positive factors both at home and abroad.

Le Hien








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