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Economic results in Q3 / 2017 with positive data will be a great expectation for the Vietnam economy in 2018 to gain more important milestones.

Written by Nam Huong Corp
2018-03-01

Vietnam's manufacturing sector contributes to high growth rates
Total inflation has been out of the bottom rated with a September increase of 3.4% over the same period last year due to rising health care costs and rising oil prices (3.4% last month).
Increasing number of tourists to Vietnam, foreign direct investment (FDI) and agricultural production have also shown a strong contribution to the country's economic development. With the recent data, we revised Vietnam's economic growth forecast for 2017 to 6.6% and continue to expect growth in 2018 to reach 6.4% .

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"Economic results in the third quarter of 2017 also partly mitigate the pressure on the Government and the State Bank of Vietnam (SBV), as more and more measures are being launched to stimulate economic growth with own challenges. The economy in Q4 / 2017 will maintain its momentum as production, tourism, FDI and agriculture continue to be good, "said HSBC.

Remarkably, Vietnam's manufacturing sector has contributed the highest growth rate in the past 10 years. In addition, the latest PMI indicates that this uptrend may improve as 2017 is about to end. PMI in September increased from 51.8 points last month to 53.3 points thanks to new orders and high employment. Therefore, this result reinforces our view that Vietnam's growth will be very good until the end of the year.

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Lighter pressure

More importantly, the strong Q3/2017 economic performance has helped ease the burden on the government and the SBV as they are adopting economic stimulus measures that could exacerbate the challenges of the US economy. In July, the SBV cut the policy interest rate by 25% to 6.25%, while simultaneously cutting other interest rates to boost economic growth.

In August, Prime Minister Nguyen Xuan Phuc also called for an increase of credit growth target from 18% to 21% to encourage investment and personal consumption.

"We recognize that credit growth is not necessarily a problem as the role of private consumption and non-state investment is increasing, which can create new risks for the industry, if new credit is allocated to less efficient industries, "said HSBC.

In addition, the achievement of the 6.7% target set by the Government this year (or at least close to achieving) will make it difficult for Vietnam to exceed the debt limit against GDP in 65% set by the National Assembly. According to the Ministry of Finance, assuming Vietnam's GDP growth remains at 6.7%, public debt will reach a high record 64.8% of GDP in 2017-2018 before falling gradually over the next years. Of course, there are still many risks that will go along with economic growth in 2018, especially as global trade sharply drops, but at least the challenges this year have been mitigated. We expect Vietnam's economic growth in 2018 to reach 6.4%.

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National brand is the driving force of growth

Mr. Vu Tien Loc, President of Vietnam Chamber of Commerce and Industry (VCCI) said:
"As we know, Vietnam has successfully organized the Asia-Pacific Economic Cooperation (APEC) event. The success of APEC has brought Vietnam to new heights, not only directly at the global level, but also to contribute to the integration efforts. Efforts by the Party, State as well as enterprises to orient the content of APEC have just proved this.

After the APEC event, I also like VCCI continuously welcome foreign business delegations to explore investment opportunities. It can be said that Vietnam has never become a global investment attraction like this before. Previously, according to analyzes and assessments, Vietnam ranks 16th among the most attracting investment destination. However, this year, we are ranked in the 14th. In APEC, Vietnam is one of the four leading investment attraction countries, besides China, the United States and Indonesia.

It should be added that the assessment was made before APEC took place, but if evaluated after APEC succeeded, the ranking may be higher. I think that what is said above is the positive factors that have spread and impact strongly on the growth of Vietnam's economy in 2018 as well as in the years to come, by the national brand. Vietnam's position on the international scene has increased markedly. "

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Japanese businesses continue to boost investment in Vietnam

Mr. Hironobu Kitagawa, Chief Representative of JETRO in Hanoi shared: "Data on economic growth in recent years shows that 2017 is a year Vietnam's economy remaning on the rise. It is expected that the growth momentum of the Vietnamese economy will continue to maintain this pace in 2018.

The high economic growth rate is one of the important factors contributing to Vietnam becoming one of the attractive investment destinations of Japanese investors. JETRO survey shows that Japanese enterprises are paying special attention to the Vietnamese market. With optimistic forecasts, Japanese companies will definitely accelerate their investment in Vietnam in the near future, especially in 2018.

However, in order to become an attractive investment destination for foreign investors, including Japanese companies, Vietnam needs to continue to address some of the limitations associated with joint ventures, domestic enterprises with foreign direct investment (FDI), reduce costs for enterprises, develop supporting industries. In this process, JETRO will continue to accompany, share and support Vietnam Government.
On the linkage between domestic and FDI enterprises, JETRO is implementing a program to provide information on Japanese investors to Vietnamese enterprises from the form, field of operation to the way of operating factory. In addition, JETRO organizes business connections between the two countries so that they can meet, learn and exchange information. "

According to Business Style Magazine

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