Vietnam GDP to grow by 6.6% in 2018: ICAEW
The forecast was made by the Institute of Chartered Accountants in England and Wales (ICAEW), who organised a seminar on economic insight for Southeast Asia in Hanoi on June 6.
Growth in the region is forecast to come in at 4.9 per cent from 5.3 per cent last year, as a result of moderate export growth across the region from the sharp acceleration last year.
Unlike the US and Europe, Asia had a promising start this year, with Southeast Asia economies expanding 5.2 per cent year-on-year, slightly softer than the 5.3 per cent in the previous quarter.
In Việt Nam, economic growth eased back in the first quarter, to 7.4 per cent year-on-year, following a stellar end to last year.
However, the quarterly result was still the strongest Q1 outcome in a decade driven by ongoing strength in the manufacturing sector, solid service sector activity and improving agriculture output.
Mark Billington, ICAEW regional director for Southeast Asian, said: “Although for Việt Nam external demand is expected to moderate, domestic demand is forecast to strengthen in 2018, driven by solid foreign direct investment inflows, buoyant consumer spending and expansionary monetary policy conditions.”
In 2019-20, we expect growth to ease back slightly to around 6.3 per cent from our forecast of 6.6 per cent this year amid a less expansionary monetary policy and a maturing of the global trade cycle,” he added.
Monetary conditions will also remain supportive of domestic demand.
In July last year, the central bank lowered its rediscount and refinancing rate to 4.25 per cent and 6.25 per cent respectively.
The increase in private credit will also encourage household spending.
The State Bank of Vietnam aims to achieve credit growth of 17 per cent this year after bank lending increased by 18.2 per cent last year.
However, this rapid expansion of lending does raise risks to financial stability and inflation.
Indeed, while headline inflation has so far been below the government’s 4 per cent target this year, inflation is expected to rise to an average of 3.9 per cent this year as food prices exert less of a drag.
But there is a risk that price pressures pick up more significantly. In this event policy makers will either need to accept lower growth rates or take a chance on inflation.
Separately, rising US-China trade frictions have increased the risks of a “bad case” trade war scenario.
As a small open economy heavily dependent on external trade, an increase in protectionism and slower global trade would have significant knock-on effects for Vietnam, even if it is not the direct target of increased tariffs. Its dependence on foreign investor flows also make it vulnerable to changing global sentiment, attendees heard at the seminar.
Nonetheless, it is more likely that tariff imposition will be contained and greater intra-regional trade and the increase in domestic demand’s contribution to GDP will likely protect Asia’s growth to some extent.
Commenting generally on the region, Sian Fenner, ICAEW Economic Advisor and Oxford Economics Lead Asia Economist, said “Manufacturing Purchasing Managers Index (PMI) and recent trade data all point to a more moderate growth in the region going forward. This is consistent with our view that export growth across the region will ease from 2017’s performance, reflecting softer Chinese import demand and normalisation in the global electronics cycle”.
We forecast moderate easing in Southeast Asia’s GDP growth to 4.9 per cent in 2018. The slowdown is expected to be broad-based, with only Indonesia growing faster than 2017, she said.
Related News
Enhance the core values of the national brand
15:36 | 02/05/2024 Import-Export
Wood exports started well
13:26 | 20/04/2024 Import-Export
Leverage to increase the scale of Vietnam - Laos trade turnover
10:51 | 15/04/2024 Import-Export
Vietnam-China trade reaches over US$ 27 billion
09:29 | 10/04/2024 Import-Export
Latest News
Dien Bien Phu Victory shows strength of intelligence, public consensus: Officer
15:37 | 06/05/2024 Headlines
Vietnam acts to seize opportunity to join global semiconductor supply
15:33 | 06/05/2024 Headlines
Vietnam improving readiness to attract foreign investment: official
16:30 | 05/05/2024 Headlines
Green logistics helps firms obtain sustainable, comprehensive development: Insiders
16:29 | 05/05/2024 Headlines
More News
Việt Nam has many opportunities to improve labour productivity: expert
15:14 | 04/05/2024 Headlines
PM presides over Government’s regular meeting
15:06 | 04/05/2024 Headlines
Ample room for Việt Nam-Thailand cooperation in new economic sectors: official
14:50 | 03/05/2024 Headlines
Exports, FDI remain Vietnam’s bright spots: HSBC
17:16 | 02/05/2024 Headlines
Growth engines rev up in first four months
17:12 | 02/05/2024 Headlines
Vietnam fulfills Chairmanship of Asia Pacific Group at UN for April
19:38 | 01/05/2024 Headlines
Startups gradually mature in international markets
08:22 | 01/05/2024 Headlines
Việt Nam to promote local tourism
13:37 | 30/04/2024 Headlines
April 30 Victory – Glorious milestone in national history
13:34 | 30/04/2024 Headlines
Your care
Dien Bien Phu Victory shows strength of intelligence, public consensus: Officer
15:37 | 06/05/2024 Headlines
Vietnam acts to seize opportunity to join global semiconductor supply
15:33 | 06/05/2024 Headlines
Vietnam improving readiness to attract foreign investment: official
16:30 | 05/05/2024 Headlines
Green logistics helps firms obtain sustainable, comprehensive development: Insiders
16:29 | 05/05/2024 Headlines
Việt Nam has many opportunities to improve labour productivity: expert
15:14 | 04/05/2024 Headlines