According to HSBC Bank's November 2023 report on Vietnam's economic landscape, Vietnam is experiencing steady growth in exports, primarily driven by the electronics industry. However, the report advises attention towards rising prices, particularly in food and energy sectors. The State Bank is expected to maintain a stable policy interest rate of 4.5% throughout the year 2024.

Export growth potential

According to HSBC experts, since the fourth quarter, Vietnam's export sector has showed signs of improvement, with a 6.7% growth in November compared to the same period last year. While textiles and footwear remain stagnant, other product categories such as computer-related components (up 20.2% compared to last year) and machinery (up 5.0% compared to last year) are showing signs of being steady and progress. Towards the year end, agricultural exports in Vietnam are showing strong growth potential. The relaxation of visa policies starting from August has contributed to a steady rebound in the number of international visitors. In November alone, Vietnam welcomed over 1 million visitors, marking the fifth consecutive month surpassing this milestone. With a total of 11.2 million visitors since the start of the year, it appears that the target of 12-13 million visitors for 2023 is well within reach. Statistics indicate that the influx of international visitors to Vietnam has increased by 3.8 times compared to the same period last year, reaching 68.9% of the level seen in the pre-COVID-19 year of 2019. Nonetheless, HSBC experts acknowledged that the rebound of Chinese tourists appears to be limited, amounting to only 30% of the level seen in 2019. Furthermore, competition in the tourism sector among ASEAN countries is intensifying. This was evident as Thailand implemented visa waivers for Chinese and Indian tourists, prompting Malaysia to follow as the next country to adopt this policy.

Interest rate expected to stay at 4.5%

HSBC has recognised that inflation remains under control. In November, headline inflation only rose by 0.2% compared to the previous month, resulting in a decrease of 3.4% in inflation compared to the same period last year. Despite the pressure on domestic rice prices, the increase in pork prices offset the rice increase. In November, there were several noteworthy developments in the economic landscape. Firstly, lower oil prices played a role in curbing inflation. Additionally, medical costs saw an increase for the first time in four years due to changes in national medical service pricing. The government had initially pushed for healthcare reform before the COVID-19 pandemic, resulting in higher recurring medical expenses. These efforts were put on hold during the pandemic but were resumed in November. The State Bank has observed positive signs, such as controlled inflation and a stable economic outlook, particularly in the external sector. However, it's important to note that the risk of price increases has not completely disappeared. Electricity prices rose by 4.5% in November in response to a decrease in hydropower output caused by the El Nino phenomenon. Normally, this change would be reflected in the consumer price index (CPI) a month later. “Although we need to be mindful of price increases such as food and energy prices, we expect the State Bank to keep the policy interest rate stable at 4.50% throughout 2024,” HSBC’s expert said./.