HSBC has raised Vietnam’s growth forecast from 7.6% to 8.1% this year but revised down the forecast for next year from 6% to 5.8%.
According to the lender, the growth of this year still benefits from the advantages in Vietnam’s post-pandemic reopening, but challenges will have heavier impacts on the country next year, especially when the effects of reopening are fading and the impacts of high inflation are clearer.
Despite the influences of the global economic slowdown, Vietnam may still top ASEAN countries in terms of growth, according to experts from HSBC.
According to HSBC, Vietnam made a booming recovery in 2022, which makes it more likely to continue to be one of the countries with outstanding growth in Asia.
However, after posting year-on-year growth of over 17% in the first three quarters of this year, the country’s export growth slowed down in October and sharply reduced in November compared to the same periods of the last two years.
The export decline was seen in fields including electronics, garment, footwear, wood furniture and machinery. Particularly, the US’s economic downturn makes the situation worse as the US is the largest market for many Vietnamese exports.
Meanwhile, a positive sign in Vietnam’s economic outlook is its recovering labour market as its unemployment rate reduced to 2.3% as of the third quarter of this year.
The rate possibly continues to drop as more tourism-relating jobs are expected to add because foreign visitors are returning although the international arrivals to Vietnam so far this year do not reach 20% of that in 2019.
Regarding policy making, HSBC experts believe that Vietnam does not have much fiscal room to apply measures to mitigate the impact of high energy prices. Since April, Vietnam’s authorities have cut several taxes, including fuel and environmental taxes.
On the other hand, HSBC experts also said that Vietnam has started to witness stronger inflation pressure.
The country might also witness a domestic energy shortage, causing inflation to rise.
Although HSBC recently slightly lowered its inflation forecast for Vietnam in 2022 from 3.4% to 3.2%, it has also raised its inflation forecast for 2023 to 4% instead of the previously projected 3.7%. This means that the SBV is likely to continue the tightened monetary policy.
