WORDS ON THE STREET 70th anniversary of Hanoi's Liberation Day Vietnam - Asia 2023 Smart City Summit Hanoi celebrates 15 years of administrative boundary adjustment 12th Vietnam-France decentrialized cooperation conference 31st Sea Games - Vietnam 2021 Covid-19 Pandemic
Home / Economy / Industry
Vietnam growth may slow to 3% in 2020, likely to rebound to 7.8% in 2021: StanChart
Minh Anh 18:33, 2020/10/20
Vietnam is one of the few Asian economies to have registered positive growth so far this year, despite the second wave of infections.

Vietnam’s economy is projected to grow by 3% in 2020 and surge to 7.8% in 2021 as rising consumption on improving sentiment, and faster manufacturing will drive growth in the fourth quarter (Q4) this year, Standard Chartered has said in a note.

 Motorists wait on their motorcycles at a traffic light during rush hour in Ho Chi Minh City on September 8, 2020. Photo: Nhac Nguyen/AFP 

Vietnam’s economy expanded 2.62% in Q3, bringing the three-quarter growth to 2.12%, according to government data.

“Vietnam is one of the few Asian economies to have registered positive growth so far this year, despite the second wave of infections. We expect Q4 growth to increase as domestic activity resumes and sentiment picks up. Improving services growth and infrastructure investment should help Vietnam outperform the rest of Asia. We maintain our positive view on Vietnam’s medium- and long-term economic outlook.” said Chidu Narayanan, economist for Asia, Standard Chartered Bank.

According to Standard Chartered’s latest macroeconomic report on Vietnam titled “Vietnam – Q3 disruption, but recovery remains intact”, a likely improvement in external demand in Q4 should support manufacturing growth, forecast at roughly 7.3% in full-year 2020. Both exports and imports are expected to increase as a result. Trade is likely to remain in surplus for the rest of 2020 as exports and imports move in tandem.

Construction activity is anticipated to improve in Q4, supported by increased public infrastructure investment. Private consumption, accounting for nearly 68% of GDP, should grow strongly in Q4 on improving domestic sentiment. Private investment, however, is likely to remain subdued on lingering uncertainty about medium-term demand.

Standard Chartered’s economists project newly registered FDI inflows into Vietnam to decline in 2020, but remain strong at close to US$13 billion. Lingering uncertainty on global demand and depressed investment sentiment are likely to weigh on FDI inflows in the medium term.

While Vietnam stands to benefit from the ongoing relocation of manufacturing amid elevated geopolitical tensions, inflows are likely to be lower than in previous years. Further government measures and a sustained move of low-tech manufacturing should support FDI inflows.

The study also forecasts that the Vietnamese central bank will remain accommodative in the near term to support growth. The central bank cut the policy rate by a further 50bps to a historical low of 4% on October 1. The central bank’s 200bps of rate cuts in the year to date and the reopening of the economy should aid further credit growth in the near term.

The Vietnamese government has revised down its growth target to 2-3% for this year, lower than the initial 6.8% estimate.

The World Bank earlier this month expected Vietnam’s 2020 growth at 2.5-3%. Meanwhile, the International Monetary Fund (IMF) on October 14 trimmed its growth forecast for Vietnam to 1.6% in 2020 from a previous estimate of 2.7% in June.

RELATED NEWS
TAG: Vietnam GDP growth Standard Chartered FDI credit growth
Other news
12:07, 2024/12/09
Bat Trang artisans innovate to meet global market demands
To boost competitiveness, Bat Trang pottery businesses leverage information technology for product promotion.
17:56, 2024/12/07
Vietnam youth gears up for a greener future
The event sought to equip Vietnamese youth with the skills and opportunities to work together and take an active role in advancing the green economy and supporting a sustainable transition.
14:51, 2024/12/07
Hanoi to create over 213,000 jobs in Jan-Nov
The city is estimated to create 225,000 jobs in 2024, meeting 136.3% of the year's plan.
10:51, 2024/12/06
Vietnam partners with NVIDIA to establish AI research center
The partnership is expected to create breakthroughs in key technology areas and job opportunities for Vietnamese talents.
22:51, 2024/12/03
Hanoi grasps opportunities to drive semiconductor industry growth
With Hanoi's advantages and readiness, a specific regulatory framework for the semiconductor sector can be created, enabling efficient investment promotion in the city.
22:44, 2024/11/28
Internet users in Vietnam to hit 100 million by 2029
Internet Day 2024 highlighted the rapid growth of internet penetration in Vietnam and the country's strategic plans for digital transformation.