Last update: 16:09 | 07/09/2017
Viet Nam’s economy is well positioned for growth in international trade and will continue to experience high growth over the next three to five years, said Chief Executive Officer (CEO) of HSBC Bank Viet Nam, Pham Hong Hai.
Hai made the statement during an HSBC Annual Business event themed “Step into the Future”, updating marketplace information and discussing Viet Nam’s economic prospects.
“We are bullish for Viet Nam’s economic growth in the short to medium term and cautiously optimistic for the long term as it is dependent on the progress of our economic reforms,” Hai said.
“Reform is the only option and we do not have much time,” he said, adding that Viet Nam’s engagement in key regional initiatives like the Asean Economic Community (AEC), the Regional Comprehensive Economic Partnership (RCEP), and EU-Viet Nam FTA helps to accelerate the reform process.
Viet Nam’s economy is likely to grow by only 6 per cent this year, HSBC said in its latest report, revising its previous forecast down from 6.4 per cent.
The country’s GDP grew 6.2 per cent in the second quarter, driven by gains in both the industrial and service sectors.
This was higher than HSBC’s forecast of 5.9 percent, but the bank has still reined in its 2017 growth forecast due to the country’s sluggish first quarter.
The credit growth rate reached 7.54 per cent at the end of June. In early July, the State Bank of Viet Nam (SBV) reduced its lending interest rate by 0.25 per cent to 6.25 per cent for the first time in three years to boost economic growth, as Vietnamese companies still rely heavily on bank loans.
“We do not expect any further easing by the SBV this year,” Hai said.
Foreign direct investment (FDI) in the first six months was estimated at $7.7 billion, up 6.5 per cent over the same period of 2016.
Manufacturing attracted 66.7 per cent of total foreign investment, followed by mining at 10.6 per cent.
With new factories commencing operation this year, we expect FDI to drive further gains in Viet Nam’s global export market share, Hai said.
Forecasting the trend of global economic growth, Douglas Lippoldt, Chief Trade Economist at HSBC Global Research, said there were signs that the global trade situation is improving.
Most of Viet Nam’s top 10 export markets, including the US, China, Japan and South Korea, are expected to improve in the 2017-2018 period, compared to 2016, Lippoldt said.
Increasing import demand in these leading markets would offer plenty of opportunities for Viet Nam, he added.
However, there are still particular challenges that Viet Nam has to face, such as turbulence and uncertainty in global trade policy, together with rising protectionism in some developed countries including the US, he said, adding that further trade liberalisation is needed to support the upturn.