HSBC raises Vietnam's growth forecast to 7%

HSBC’s latest report adjusted Vietnam’s full-year growth forecast after the General Statistics Office announced that third-quarter GDP grew by 7.4%, despite the effects of Typhoon Yagi. According to the bank, this result was "stronger than expected," surpassing their previous forecast of 6.2%.

As a result, HSBC's current forecast is the highest among international organizations and matches Vietnam’s target range of 6.5-7%. Previously, several financial institutions maintained or even raised their growth forecasts for Vietnam following Typhoon Yagi.

Specifically, the Asian Development Bank (ADB) maintained its forecast at 6%. The World Bank (WB) expected a rate of 6.1%, while the International Monetary Fund (IMF) and UOB both increased their forecasts to 6.1% and 6.4%, respectively.

According to HSBC, after a difficult 2023 and the first quarter of 2024, Vietnam has returned as the growth star of Southeast Asia. This result is driven by manufacturing growth, with exports continuing to recover and expanding across various sectors, from electronics to textiles and footwear.

Although Typhoon Yagi likely contributed to a slowdown in September's export growth, the impact is expected to be short-lived. Manufacturing businesses maintain a positive outlook for the future, as underlying demand remains strong.

Vietnam continues to attract foreign capital flows, with foundational aspects remaining positive. Although new FDI registrations declined in the third quarter, sectors such as real estate and energy have seen increased investment.

Looking ahead, capital inflows into manufacturing are likely to remain stable, supported by General Secretary and President To Lam’s visit to the U.S., according to HSBC. Furthermore, ongoing efforts to strengthen relationships with international partners will facilitate further investment, as seen with Vietnam and France recently upgrading their relationship to a comprehensive strategic partnership.

Regarding inflation, price pressures are no longer as intense, although the long-term impact of Typhoon Yagi still needs monitoring. With global energy prices decreasing and the global monetary policy cycle reversing, HSBC forecasts annual inflation at 3.6%, below the State Bank’s target ceiling of 4.5%. Meanwhile, the policy interest rate is expected to remain at its current level of 4.5%.