Vietnam’s economic outlook optimistic

Showing improvement: A container ship sailing past a luxury apartment complex in Ho Chi Minh City. Merchandise exports have hit a high of US$31.9bil (RM134.6bil). — AFP

HANOI: Vietnam’s economy should get back to gross domestic product (GDP) growth of 6.8% next year, which will be driven by a return of strong foreign direct investment (FDI) into the market, mainly focusing on the manufacturing sector, according to HSBC Vietnam chief executive officer (CEO) Tim Evans.

This would benefit Vietnam’s exports, especially as free trade agreements that have been signed over the past two years start to bear fruit, according to the CEO.

The continued expansion of the middle class and in particular the rising affluent sector will lead to changes in consumption as Vietnamese people start spending more and more on leisure and travel.

Infrastructure rollout will also continue to fuel economic activities especially in the renewable/green arena given the strong ambitions made by the Vietnamese government following the recent 26th United Nations Climate Change Conference of the Parties or COP26 in Glasgow, the UK.

Meanwhile, the World Bank said in the December edition of its Vietnam Macro Monitoring, that Vietnam’s economic conditions continued to improve, with both industrial production and retail sales registering a third month of growth.

Merchandise exports hit a record high of US$31.9bil (RM134.6bil), helping maintain a second consecutive month of trade surplus while FDI commitments recovered after a brief dip in October, according to the report.

Inflation ticked up due to fuel price hikes, recovering non-food domestic demand and rising logistics costs while credit growth remained stable, providing ample liquidity to support the economy recovery.

After two months of decrease, the Consumer Price Index (CPI) increased by 0.3% month-on-month in November.

Compared with a year ago, the CPI rose by 2.1% year-on-year, slightly higher than in October, but well below the 4% target set by the State Bank of Vietnam.

The government continued its contractionary fiscal stance as the budget balance posted another month of surplus, driven by strong revenue collection, the report noted.

The policy of “living with Covid-19” will involve continued vigilance and fast action by the authorities, both in vaccination and in social distancing, testing, and quarantining.

There is also a clear need for fiscal policy support to boost private demand and help the domestic economy recover. — Viet Nam News/ANN