Vietnam's economy grew rapidly in QII/2017, reaching 6.2%. The newly released macroeconomic report of HSBC said that despite the bleak economic outlook in the beginning of the year, the positive results of Vietnam economy in the second quarter has affirmed the strong economic foundation of the country.
HSBC stressed that the data of QII/2017 clearly show the country's dependence on industrial production and exports, particularly the foreign investment sector to sustain the growth.
Specifically, the GDP growth of 6.2 percent in the second quarter was due to strong export growth and industrial output, especially in smartphone manufacturing. The service sector, which accounts for the largest share of the GDP, remained stable.
"Growth in the last quarter is a positive signal for the rest of the year. We expect the economy to continue this rally thanks to a strong increase in agricultural output and foreign direct investment," said HSBC.
The influx of foreign direct investment to Vietnam will help create buffer stocks and add more value to production.
Notably, HSBC has decided to reduce its forecast of Vietnam economic growth for 2017 from 6.4% to 6%, due to a slow start to the first quarter.
Samsung Electronics accounts for about 20% of the country's total exports; therefore, its termination of the Galaxy Note 7 production has had a significant impact on Vietnam's economic growth, HSBC said.
In the second quarter of 2017, industrial production increased thanks to the production of Samsung Galaxy S8. Industrial production index of QII rose 9% y-o-y thanks to strong media eqquipment's production. Construction also expanded in the second quarter, up 12% y-o-y (up from 4.8% in the first quarter).
According to HSBC, the service sector is still a strength of Vietnam thanks to tourism. According to the General Statistics Office of Vietnam (GSO), an estimated 6.2 million tourists have come to Vietnam in the first half of 2017, up 30.2% over the same period.
Vietnam has welcomed 950,000 tourists in June 2017, up 33.6% over the same period, leading to the growth of food and accommodation and other related services.
HSBC said that despite some obstacles, Vietnam's growth prospects are still very promising and can be sustained if the external environment is positive as well as the economic reforms continue.