HSBC raises Vietnam GDP growth forecast to 6.5%

Vietnam’s GDP growth jumped to a near two-year high of 6.9% in the second quarter, far exceeding HSBC and market expectations of 6.0%.

This means that Vietnam, with growth of 6.5%, is likely to be the fastest-growing economy in ASEAN in 2024, a place it lost to Malaysia and the Philippines in 2022 and 2023 respectively, the British bank said in a report.

“In addition to decent economic growth, more encouraging is that growth has started to show signs of broadening,” the report said.

The manufacturing sector showed a “surprising” recovery, growing by 10%.

Sentiment among manufacturers has clearly improved – the purchasing managers’ index rose sharply in June to 54.7 (a level above 50 indicates expansion).

New export orders and employment reached their highest levels in several months, confirming a favourable outlook for Vietnam’s manufacturing sector.

Non-electronic shipments began to show signs of recovery. In particular, textile and footwear exports, which are more vulnerable to disruptions in the Red Sea, also rebounded, posting double-digit growth.

HSBC also sees promising prospects for long-term foreign investment in Vietnam, especially in the manufacturing and real estate sectors.

Beyond trade, tourism-related services continue to maintain positive momentum. This explains why sectors such as transport and accommodation continue to shine.

In the first six months, Vietnam attracted more than 8.8 million tourists, which is a better result than in 2019.

The bank said the country was on track to achieve its annual target of welcoming 17-18 million tourists this year.

Retail sales growth has not returned to its pre-pandemic trend, however. HSBC estimates that there is still a gap of 10% below what the pre-pandemic trend would suggest.

“We believe Vietnam will remain on track to achieve improved growth prospects in 2024 if the economic recovery continues to spread,” the bank said.