Observers update year-end estimate

After a record third quarter, observers have upgraded their whole-year growth forecasts

Sebastian Eckardt, the World Bank’s lead economist for Vietnam, told VIR that Vietnam’s significantly-improved economic activities – especially the year-on-year growth rate of 7.46 per cent in the third quarter – are expected to enable the economy to grow 6.7 per cent for the entire year, which exceeds the institution’s projection of 6.3 per cent.

According to the World Bank, Vietnam is expected to remain one of the top regional growth nations (see box).

Meanwhile, the Asian Development Bank (ADB), also said that the outlook for Vietnam remains bright thanks to strong production recovery, and continued buoyancy in foreign direct investment inflows, which would add impetus to growth in the coming months.

The economy grew by a 10-year record 7.46 per cent in this year’s third quarter – up from 6.28 per cent in the second quarter and 5.15 per cent in the first quarter.

This growth trend is ascribed to a recovery of local production. In this year’s first nine months, the processing and manufacturing sector, which contribute to 80 per cent of the industrial sector’s growth, expanded 12.8 per cent, the highest rise over the past many years, contributing to 9 per cent of the economy’s nine-month growth, according to the General Statics Office.

Standard Chartered is also forecasting quite a bright outlook for Vietnam.

“We raise our GDP growth forecast for both 2017 and 2018 to 6.8 per cent [versus prior forecasts of 6.4 and 6.6 per cent in 2017 and 2018, respectively], driven by faster electronics manufacturing growth in 2017’s second half.

This would make Vietnam the fastest-growing ASEAN-6 economy in 2017, likely overtaking the Philippines,” said Chidu Narayanan, economist for Standard Chartered’s in Asia.

“We expect the manufacturing sector to grow at a faster pace in the fourth quarter, buoyed by robust electronics manufacturing activity. Stronger manufacturing growth should push overall growth higher in the year’s second half to 7.6 per cent year-on-year, taking full-year GDP growth to 6.8 per cent,” Narayanan added.

In this year’s first nine months, Vietnam earned $49.5 billion from exporting electronics items, accounting for 32.14 per cent of the country’s total export turnover. The figure, largely driven by Samsung, is expected to come to $53 billion this year, occupying nearly 26 per cent of the country’s total export turnover.

For its part, HSBC last week stated in a Vietnam update, “Vietnam has soared above our expectations.”

“Vietnam is now tracking ahead of our full-year growth expectations and the Bloomberg consensus of 6.3 per cent. And with leading indicators still robust, we now revise our growth forecast to reach 6.6 per cent by year-end,” said HSBC economist Noelan Arbis.

According to the banks, Vietnam’s economy continues to show strong fundamentals. The growth is being driven by healthy domestic demand, rebounding agricultural production, and strong export-oriented manufacturing, aided by a recovery in external demand, which will be only partially offset by declining oil production.

Minister of Planning and Investment Nguyen Chi Dung told the National Assembly’s Standing Committee last week that the government’s target of 6.7 per cent in economic growth for this year could be reached.

The government expects that this year, the agricultural, industrial and construction, and service sectors will rise 2.78, 7.56, and 11 per cent, respectively.