Vietnam to cash in on external demand

March 08, 2014 | 09:45

(0) user say

Vietnam continues to benefit from strong international demand, despite soft domestic consumption, according to a recent report released by the Australia-New Zealand Banking Group (ANZ).

In February, activity indicators continued to show a slow but steady improvement with foreign direct investment (FDI) constantly surging.

ANZ forecast Vietnam’s GDP growth at 5.6% and 5.8% in 2014 and 2015, and inflation rate at 7.0-7.5% this year.

Vietnam’s external position remained robust in February as FDI continues to be the bulwark of the economy.

Since February, there have been 122 newly licensed projects worth US$830.9 million in registered capital. Furthermore, 41 existing projects received additional funding of US$708.8 million, taking the total FDI capital infusion to US$1,539.7 million, said the report.

International trade posted a narrow surplus of US$244 million. Initial estimates from the customs office reported an annual increase in exports and imports by 34.3% and 49.2% respectively, which reflect distortions from the celebrations of the Lunar New Year (Tet) holiday in February.

ANZ revealed that February trade balance presented a deficit of US$1,200 million. This partially offset the revised trade surplus of US$1,444 million in January, from an initial print of a narrow deficit of US$100 million.

Considering the continuous flow of FDI to the manufacturing sector, ANZ predicted both exports and imports would continue rising together, benefitting from the improvement in developed economies. With domestic demand and imports for consumption remaining modest.

Industrial production (IP) rose an average of 7.9% annually over the January-February period. Manufacturing production, which we estimate accounts for 70% of the IP index, remains solid. Despite muted domestic consumption, IP continues to benefit from FDI-related export production, the report added.

VOV

What the stars mean:

★ Poor ★ ★ Promising ★★★ Good ★★★★ Very good ★★★★★ Exceptional