Wed, 22nd May 2024 15:57 (GMT +7)

Viet Nam on track to see better growth prospects in 2024: HSBC

Monday, 08/04/2024 | 17:30:00 [GMT +7] A  A

Viet Nam remains on track to see better growth prospects in 2024, but it will take time for the recovery to broaden out, noted HSBC, maintaining its GDP growth forecast for Viet Nam at 6 percent this year. 

In its report Viet Nam at a glance, HSBC said, tourism-related services continued to enjoy the positive momentum in Viet Nam.

For the first time since COVID-19, Viet Nam's monthly inbound tourists approached close to 1.6 million, exceeding pre-pandemic levels by 13 percent. While base effects partially played a role, a rally in mainland Chinese tourists' return also added some much-needed support.

After Singapore became the first ASEAN country to see an almost full return of Chinese tourists in February, Viet Nam is racing closer, with the recovery rate hiking to 90 percent in March.

This is partially thanks to Viet Nam's ongoing efforts to restore direct flights with mainland China, which has approached almost to 80 percent of pre-pandemic levels.

While Chinese outbound tourism to ASEAN has seen a positive pick-up lately, there is still room for further improvement. Encouragingly, an expansion in the visa exemption list is under consideration by the authorities, reeommended the bank.

Besides, the external-facing manufacturing sector continues to regain its past glory. Exports expanded by over 14 percent year-on-year in March, bringing quarterly growth to 17 percent year-on-year. This is largely driven by an upturn in the electronics cycle, benefiting from being a key production hub for Samsung's smartphones.

In addition, while import growth also rebounded to double-digit in the first quarter, trade surplus widened to US$8 billion, overshooting 2023's monthly average by over 10 percent.

While near-term trade is about to take off again, long-term FDI prospects remain a bright spot. Greenfield FDI rose almost 60 percent year-on-year during January-March, 65 percent of which is concentrated in the pillar manufacturing sector and the rest in the real estate.

Looking at the source of investors, it is interesting to see that Singapore has regained the crown as Viet Nam's largest FDI provider, with an impressive share of 50 percent.

Greater China, who accounted for half of Viet Nam's FDI in 2023, came second with a share of 30 percent. South Korea and Japan, who traditionally are Viet Nam's two largest investors, only accounted for a share of 15 percent combined.

HSBC expects inflation in Viet Nam to average around 3.9 percent this year.

Source: VGP