Vietnam to lead ASEAN in economic growth this year: HSBC
By
Dat Nguyen December 20, 2024 | 02:29 am PT
Vietnam is expected to lead ASEAN in growth this year with a GDP expansion rate of 7%, driven by manufacturing and trade, according to lender HSBC.
The forecast is grounded on strong performances in the second and
third quarter with growth rates of 6.9% and 7.4% respectively, the bank said in a note.
Vietnam is expected to grow stronger than Indonesia, Malaysia, Philippines, Singapore and Thailand this year, making it once again "ASEAN’s growth star" after giving the position to the Philippines last year.
Vietnam started the year with a challenging first quarter, and the typhoon Yagi, the strongest to hit northern Vietnam in decades, added burden to the agriculture, forestry and fishery sector.
However, manufacturing raged on with the index of industrial production growing at 8.4% year-on-year in the first 11 months.
Exports surged 15.4% in the period, with electronics, textiles and footwears all posting strong expansion.
In terms of foreign direct investment, Vietnam recorded increases in property and energy, with nearly US$21.7 billion disbursed in the first 11 months, up 7.1% year-on-year.
This marks the third consecutive year in which disbursement exceeded $20 billion.
A number of large global companies have shown increasing interest in Vietnam this year.
Shunsin, a subsidiary of Apple supplier Foxconn, reportedly sought for a permit to invest $80 million to produce integrated circuits in northern Vietnam, indicative of improving production capabilities in Vietnam.
Google plans to set up an office in the country in April 2025, while chip giant Nvidia is working on building local centers to research and develop AI technologies.
The country, however, faces some challenges. Growth in the domestic sector has been recovering slower than expected, with retail sales growth remaining under pre-pandemic trend.
The Vietnamese dong has faced more fluctuation due to the volatilities before U.S.’s presidential election, China’s stimulus package and geopolitical tensions.
HSBC also warns Vietnam of food shocks next year. For instance, pork prices have been elevated as pork supply has been affected by African Swine Fever.
Whether end-demand for goods improves further will be key in determining the strength of Vietnam’s recovery, as Western markets make up close to half of Vietnam’s exports.
The possibility of the new U.S. administration, under Donald Trump, imposing higher tariffs on China and the rest of the world might affect Vietnam’s exports, as the U.S. is among its top markets.
"As result, exporters may have trouble finding alternative markets to substitute production away from the U.S. if tariffs become an issue," HSBC said.
The bank, however, still pegs Vietnam’s 2025 growth at an optimistic level of 6.5%, once again highest among the six biggest economies in ASEAN.
Vietnam is expected to lead ASEAN in growth this year with a GDP expansion rate of 7%, driven by manufacturing and trade, according to lender HSBC.
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