Standard Chartered Bank has forecast Vietnam’s economy will grow at 7.8 percent this year with manufacturing driving the revival.
A container ship docks at Cat Lai Port in Ho Chi Minh City. Photo by Shutterstock/xuanhuongho.
Tim Leelahaphan, an economist at Standard Chartered Bank, said Vietnam’s economy has been reviving since the third quarter last year.
"The recovery is steady. In the last decade Vietnam's economic growth rate was one of the fastest and we [Standard Chartered] expect this trend to [continue]."
Standard Chartered sees foreign investment and the services sector as driving factors for growth in the next few years.
Vietnam is also acknowledged as one of the most attractive destinations for foreign investors following its successful management of the Covid-19 pandemic.
It will benefit from the U.S.-China trade war, which is not likely to end with Joe Biden’s takeover in the former country.
Despite the slow global recovery and gloomy outlook for global investment, Vietnam’s FDI inflows are expected to surge in the next few years.
Although foreign direct investment pledges in Vietnam has dropped by 25 percent last year to $28.5 billion due to travel restrictions and dampened investor sentiment, foreign companies still poured $6.4 billion into existing FDI projects, up 10.6 percent year-on-year.
Increased competition will motivate Vietnam to try and rise up the value chain and become capable of adopting advanced technologies.
The Regional Comprehensive Economic Partnership (RCEP) signed last November by 15 countries will provide opportunities for Vietnam’s small and medium enterprises to move up the value chain.
Standard Chartered Bank’s view is much more optimistic than most multilateral organizations and others.
The Asian Development Bank has forecast 6.1 percent growth, the IMF expects 6.5 percent growth and HSBC foresees expansion of 7.6 percent.
Vietnamese think tanks Central Institute for Economic Management and National Center for Socioeconomic Information and Forecast have estimated GDP growth of 6.46 percent and 6.72 percent.
The government has set a growth target of 6.5 percent.