Vietnam: Bright spot amid global headwinds – ANZ

Khoon Goh, Head of Asia Research at Australia and New Zealand Banking Group (ANZ), offers his afterthoughts on Vietnam’s H1 2019 growth numbers.

Key Quotes:

“Vietnam’s GDP growth in H1 2019 was solid, considering the downturn in global trade and the impact of African swine fever on the agriculture sector.

We maintain our full year 2019 GDP growth forecast of 6.7%. Although this is down from the 7.1% growth rate achieved in 2018, this should still see Vietnam as one of the fastest-growing economies in Asia.

Inflation will remain manageable, averaging 2.8% this year which is below the State Bank of Vietnam’s 4% inflation target. We see monetary policy being on hold this year.

While Vietnam is seen as a beneficiary of the US-China trade tensions, there is a need to manage the strong foreign direct investment (FDI) inflows to ensure adequate resource allocation and to prevent over-heating. The government’s shift towards focusing on attracting new-generation FDI is essential to ensure sustainable economic development.

As Vietnam continues to reap the benefits of past reforms and commit to further ongoing reforms, the country is on track to double its per capita GNI from USD2,400 in 2018 to USD4,800 by 2028, graduating to upper middle income status.”