The forecasts are made in Standard Chartered Bank’s Global Research Report titled “Vietnam – growth is interrupted in the third quarter but the prospect of a stable recovery”.
Standard Chartered Bank forecasts that Vietnam’s economy will grow 3% in 2020 and to 7.8% by 2021.
According to Chidu Narayanan, Asia economic expert, Standard Chartered Bank, Vietnam is among the few economies in Asia that recorded positive growth this year, regardless of the effects of the wave. Covid-19 second. We expect growth in Q4 will increase thanks to the recovery of domestic economic activity and market sentiment.
Investments in infrastructure and improved services sector growth will help Vietnam achieve growth outperformed other Asian economies. We maintain a positive view on Vietnam’s economic prospects in the medium and long term.
According to the latest macroeconomic report on Vietnam, world market demand is likely to improve in Q4 and boost manufacturing sector growth – estimated at around 7.3% in 2020. Import and export activities, therefore, will also increase and continue to generate a trade surplus this year.
Construction is expected to recover in the fourth quarter as public investment in infrastructure has been boosted. Personal consumption, which contributes 68% to GDP, is expected to increase sharply in the last quarter of the year thanks to improved market sentiment. However, private sector investment is not likely to do much better given medium term demand concerns.
Standard Chartered’s experts forecast that newly registered FDI inflows to Vietnam will decline this year, but remain high, reaching $ 13 billion. Unstable world demand and bleak investment sentiment affect FDI inflows in the medium term. Although Vietnam is benefiting from the manufacturing sector shift amid escalating geopolitical tensions, capital inflows into Vietnam are expected to be lower than in previous years. The support measures from the Government and the movement of production activities that do not require high technology will help boost FDI inflows into Vietnam.
The study also predicts that the State Bank of Vietnam will continue to maintain a flexible policy in the short term to support growth. The SBV cut its policy rate by 50 percentage points to its historic low of 4% on October 1, as Standard Chartered predicted in May 2020. The State Bank cut interest rates by a total of 200 percentage points year-to-date and the reopening economy will boost credit growth in the short term.
Le Kim Lien