HSBC expects Vietnam to regain economic growth momentum next year
VOV.VN - An increase in foreign direct investment (FDI) and consumption, coupled with a growing middle class and new infrastructure can all be considered as driving forces for the Vietnamese economy to grow next year, said Tim Evans, CEO of HSBC Vietnam.
The financial expert emphasised that the local economy is likely to secure its GDP growth rate of 6.8% next year thanks to strong FDI inflows recorded in the manufacturing sector, along with the enforcement of a series of free trade agreements (FTAs) which are anticipated to promote the country’s exports in the future.
According to details given by HSBC, there remains a strong inflow of FDI into the Vietnamese market which has been slightly impacted by recent social distancing measures.
The total registered FDI capital from January 1 to November 20 increased by 0.1%, with 1,577 newly-licensed projects, while the disbursement of capital decreased by 4.2% amid total export turnover rising by 17.5%, helping the country enjoy a slight trade surplus.
Furthermore, the Purchasing Managers' Index (PMI) reached 52.5 in November, signalling improvements in business conditions following a period of decline caused by the fourth wave of the COVID-19 pandemic.
Evans, who also serves as general director of HSBC Vietnam, recommended that the Government closely monitor a number of issues, such as escalating prices of energy and high transportation costs, in a bid to prevent the national economy suffering a negative impact in the future.
The expert analysed that a gradual recovery in terms of domestic demand is likely to offset high energy prices, and that inflation is likely to rise to 3.5% in 2022, which will be within the Government’s threshold.
He also pointed out that the most unstable factor is the complicated nature of the COVID-19 pandemic as any social distancing measures to be adopted will have negative consequences on the economy.
However, the executive noted that Vietnam made progress in developing its green financial market in 2021, with large transactions executed. Still, this market is in its infancy and shows enormous potential for development.
Vietnam makes up the largest recipient of FDI among ASEAN member states in terms of GDP, with global corporations paying closer attention to environmental, social and governance (ESG) and sustainability standards.
Most notably, it has also received the highest flow of investment in renewable energy in the ASEAN region thanks to its great potential in the field.
Evans also emphasised that the COVID-19 pandemic has helped Vietnam accelerate the digitalisation process of its economy and the banking industry in particular, noting that each bank must continue to invest in digital services in order to keep up with customer needs and behaviour.
