After a challenging 2023 and first quarter, Vietnam is clearly back as ASEAN’s growth star, the bank said in its “Vietnam at a Glance: In Its Own” update. league” published on October 11.

Third-quarter growth came in at 7.4% year-on-year, beating HSBC and consensus expectations of 6.2% and 6.1% respectively, it said.

Outperformance continues to be driven by the manufacturing sector, which grew 11.4% year-on-year, according to HSBC. This was supported by healthy trade data, with exports up 15.3% year-on-year in the third quarter.

The bank noted that the trade recovery, initially centered on electronics, is showing signs of becoming more widespread, with exports of textiles and footwear increasing 16.7% year-on-year.

HSBC experts believe that while Typhoon Yagi likely played a role in September’s export growth, its impact is expected to be short-lived.

Indeed, the manufacturing PMI fell sharply into contraction territory in September, indicating a deterioration from the previous month as businesses assessed the damage to production.

Although there were some signs of difficulties in global trade, leading indicators such as manufacturing industrial production and imports continued to post double-digit year-on-year growth, supporting the view that the sector manufacturer will remain firm.

On the other hand, growth in the agro-forestry-fishing sector moderated due to the greater impact of Typhoon Yagi on the sector. The recovery in domestic services remained relatively moderate, with the spillover effects of the rebound in the external sector not being as pronounced. Retail sales growth has shown little sign of accelerating, while monthly international tourist arrivals have stagnated amid increasing regional competition to attract travelers.

However, there were encouraging signs, such as financial services and real estate showing acceleration in the third quarter. The revised land law, which came into force in August, will reinforce the improving sentiment seen in the real estate sector, while ongoing government measures, such as tax cuts, are also expected to support the domestic retail sector with time, the bank said.

Regarding FDI, Vietnam continued to attract foreign flows while the fundamental outlook remains positive. Although growth in newly registered FDI moderated in Q3/24, sectors other than manufacturing, such as real estate and energy, saw investment increase.

According to HSBC, capital flows to the manufacturing sector are expected to remain resilient in the future, as Party General Secretary and President To Lam’s visit to the United States has attracted interest from various companies such as Meta.

He added that continued efforts to deepen ties with international partners would also act as a tailwind for new investment flows, with Vietnam recently elevating its relations with France to a comprehensive strategic partnership.

Inflation has seen a notable decline in recent months, thanks to base effects and favorable price movements linked to commodity prices and exchange rate fluctuations. Given falling global energy prices and a reversal in the global monetary policy cycle, inflation is expected to remain below the 4.5% target ceiling set by the State Bank of Vietnam.

HSBC keeps its GDP growth forecast for 2025 unchanged at 6.5%. As the recovery remains uneven, banking experts expect the State Bank of Vietnam to maintain its accommodative stance and key interest rate at 4.5% until the end of 2025./.VNA