Vietnam would experience strong GDP growth this year and next, as it continues to attract FDI inflows and expand their manufacturing base, according to the head of Asia research at Australia & New Zealand Banking Group Ltd.
ANZ forecasts Vietnam's GDP growth of 6.8 per cent this year
The recent report of the Australia & New Zealand Banking Group Ltd. (ANZ) on Vietnam's economic outlook shows that the bank continues feeling optimistic about Vietnam's economic growth within next two years with a forecast of 6.8 per cent in GDP growth this year and a 7.0 per cent expectation for next year.
According to the bank, in the context of the US-China trade tensions, Vietnam could gain a number of benefits, especially in terms of export.
Foreign direct investment (FDI) increased significantly in the first half of this year and is expected to grow in the upcoming time. This would be one of the factors helping Vietnam reach its expected economic growth, alongside with the expansion of the manufacturing base and the development of some important sectors like tourism.
ANZ states that factors contributing to Vietnam’s positive long-term outlook include favorable demographics, an educated workforce, ongoing economic reforms, and benefits from free trade agreements.
On the other hand, the near-term challenges include having to ensure that inflation remains contained, credit growth is not too strong above trend, and that the balance sheets of the financial sector are strengthened.
As for monetary policy, ANZ expects the State Bank of Vietnam to keep the policy rate at 6.25 per cent in 2018.
"We expect the State Bank of Vietnam to keep the policy rate at 6.25 per cent in 2018, but to raise it to 6.75 per cent next year to keep inflation in check," said Head of Asia research at ANZ Khoon Goh.
Khoon Goh also says that ANZ forecasts USD/VND at 23,600 by end-2018 and 23,900 by end-2019. Whereas, the earlier forecast of the bank in June 2018 was VND22,780 per USD.
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