On July 3, the Hong Kong and Shanghai Banking Corporation (HSBC)released a report on Vietnam ’s macro economy and the prospects forthe country’s markets.
The report predicts thatVietnam ’s GDP growth rate this year will reach 5.1 percent. However,low purchasing manager index in June reflects a slowdown in themanufacturing sector, due to a lack of demand from both the domestic andoverseas markets. It also says that the inflation rate will be below 6percent year on year, giving the State Bank of Vietnam (SBV) scope tolower the open market rate.
Many observers sharethe same sentiment, hoping that the slow down in growth could be anopportunity for the country to clear out the deadwood and rid itself ofthe burden that has been holding back the economy. However, no oneshould hold their breath, added the report.
Itfurther says that some reforms are gathering pace, including state-ownedenterprises having to disclose their earnings and the ongoingrestructuring in the banking sector. The most promising is the Ministryof Industry and Trade’s draft strategy to attract small and mediumenterprises from overseas to develop industrial clusters.
These steps, along with many others, are necessary for Vietnam toincrease its productivity and become less dependent on input-led growth.In the meantime, however, a slowdown is inevitable.
The report also states that inflation is slowing and likely to stay insingle-digit levels this year and next year. Growth will likelyaccelerate in the second half of this year, suggesting that the worstcould be over.
But with a lack of demand and baddebts, there is still plenty left to do to unburden the economy. Fornow, at least it is heading in the right direction, says the report.
According to HSBC, with inflation slowing and the trade deficitnarrowing, the macro economic environment for Vietnam lookspromising. The SBV has also been able to accumulate more foreignreserves so it can safeguard the economy against risks.
Additionally, reforms are gathering pace to tackle deep-seated issuesin the economy. These are necessary to ensure that growth is built onincreased productivity rather than credit expansion, a more sustainablestrategy. As such, while growing is slow, it might be a blessing indisguise, says the report.-VNA
The report predicts thatVietnam ’s GDP growth rate this year will reach 5.1 percent. However,low purchasing manager index in June reflects a slowdown in themanufacturing sector, due to a lack of demand from both the domestic andoverseas markets. It also says that the inflation rate will be below 6percent year on year, giving the State Bank of Vietnam (SBV) scope tolower the open market rate.
Many observers sharethe same sentiment, hoping that the slow down in growth could be anopportunity for the country to clear out the deadwood and rid itself ofthe burden that has been holding back the economy. However, no oneshould hold their breath, added the report.
Itfurther says that some reforms are gathering pace, including state-ownedenterprises having to disclose their earnings and the ongoingrestructuring in the banking sector. The most promising is the Ministryof Industry and Trade’s draft strategy to attract small and mediumenterprises from overseas to develop industrial clusters.
These steps, along with many others, are necessary for Vietnam toincrease its productivity and become less dependent on input-led growth.In the meantime, however, a slowdown is inevitable.
The report also states that inflation is slowing and likely to stay insingle-digit levels this year and next year. Growth will likelyaccelerate in the second half of this year, suggesting that the worstcould be over.
But with a lack of demand and baddebts, there is still plenty left to do to unburden the economy. Fornow, at least it is heading in the right direction, says the report.
According to HSBC, with inflation slowing and the trade deficitnarrowing, the macro economic environment for Vietnam lookspromising. The SBV has also been able to accumulate more foreignreserves so it can safeguard the economy against risks.
Additionally, reforms are gathering pace to tackle deep-seated issuesin the economy. These are necessary to ensure that growth is built onincreased productivity rather than credit expansion, a more sustainablestrategy. As such, while growing is slow, it might be a blessing indisguise, says the report.-VNA
