Vietnam is expected to experience strong growth in the second half of the year due to the recovery of the global electronics cycle and continued positive foreign direct investment (FDI), as reported by HSBC. The investment outlook report for the second half of the year from HSBC Global Private Banking Services Division indicates that Vietnam is on a path of recovery driven by the global electronics cycle. The latest purchasing managers index (PMI) shows expanding production, with electronics exports performing especially well. Consumer electronics, in particular, have led the way, contributing significantly to export growth.
According to HSBC, Singapore, Malaysia, and Vietnam are consolidating their leading positions in the electronics industry within ASEAN. Vietnam’s attractiveness as an investment destination is also stable, with an increase in FDI projects and capital in the past 5 months. This is partly due to Vietnam being a top choice in Southeast Asia for the “China + 1” strategy, leading to the production of various goods such as MacBooks, iPads, and Apple Watches in the country.
Additionally, Vietnam’s competitive labor costs, access to markets through numerous free trade agreements, and its proximity to China make it a favored destination for supply chains. The stock market in Vietnam has been performing well, with low stock valuations compared to demand and steadily recovering corporate profits. Despite the positive outlook, inflation remains a concern, approaching the State Bank’s ceiling of 4.5%.
HSBC has raised its GDP growth forecast for the last two quarters of the year to 6.2% each quarter, and expects Vietnam’s economy to expand by 6% for the whole of 2024. However, factors such as inflation and currency volatility due to the USD strengthening in the short term may warrant caution from the State Bank in its interest rate policy.