HSBC maintains Vietnam's GDP growth forecast for 2024 at 6.5%

On September 30, HSBC's Global Research Department released the report "Asian Economics Quarterly - Race to the Finish Line" commenting on the general economic situation in Asia, emphasizing that increased exports will provide a strong boost to growth in many parts of the region, while inflation and exchange rates will ease and support Asia throughout the Year of the Dragon.

Maintain GDP forecast at 6.5%

According to experts at HSBC, Vietnam's economic recovery continues to be more solid over time in the Year of the Dragon. GDP growth improved and brought a surprise in the second quarter of 2024, increasing by 6.9% compared to the same period last year. The recovery in the external sector continues to spread beyond the consumer electronics sector.

The manufacturing sector has emerged from last year’s dismal performance. The PMI has recorded five consecutive months in expansion territory, while the industrial production index (IP) has also recorded a recovery in the textile and footwear industries.

However, HSBC experts also analyzed that the domestic sector is recovering more slowly than initially expected, in which retail growth is still lower than the pre-pandemic trend. What is encouraging is that the Government has taken many measures to support a series of domestic economic sectors, thereby creating expectations that confidence will be restored over time.

Although it was recently passed, the revised Land Law has partly contributed to the "boost" in foreign investment in this sector, with recent FDI figures showing a widespread increase.

“We believe that the potential upside can offset the temporary economic damage from Typhoon Yagi (Storm No. 3). Overall, we maintain our GDP growth forecast for both 2024 and 2025 at 6.5%,” HSBC experts forecast.

HSBC experts commented: “Vietnam is expected to see further growth as the recovery continues to be solid, the manufacturing sector is growing strongly and inflation is moving in a more favorable direction. Along with that, the economic situation in Asia in which increased exports provide a strong boost to growth in many parts of the region, while inflation and exchange rates are easing, supporting Asia throughout the Year of the Dragon.”

What are the risks?

According to HSBC, Typhoon Yagi caused a preliminary damage estimate of $1.6 billion. Although recovery and restoration efforts are underway, the aftermath of the strongest storm to hit Asia this year so far is expected to last for weeks.

In addition to the impact of global energy prices, Vietnam is also vulnerable to sudden fluctuations in food prices. For example, pork prices have skyrocketed when supplies were affected by African swine fever.

HSBC experts said that the final question is whether demand for goods improves further, which will play a decisive role in the level of Vietnam's recovery, as Western markets account for nearly half of Vietnam's exports. Therefore, it is necessary to closely monitor the trend and pace of consumer spending in the West.

HSBC experts also analyzed some other sectors. Leading the domestic economic activities recently are tourism-related sectors. Vietnam has welcomed over 11 million international visitors to date. This is the reason that helps to maintain some components of retail, such as tourism revenue increased by 26% in the first 8 months of the year, compared to the 8.5% growth of total retail growth...