Vietnam’s economic recovery is robust, with the potential for a 6% growth rate in the coming year, as projected by HSBC.
Although the country concluded the previous year with a 5.1% growth, the last quarter alone witnessed a remarkable 6.7% expansion, offering optimism for improved growth prospects ahead, according to a recent report from the U.K.-based bank.
The manufacturing sector, a pivotal driver of Vietnam’s growth, notably improved in the second half of the year after facing significant sluggishness in the initial months.
Exports in Vietnam experienced a nearly double-digit growth in the fourth quarter, primarily led by increased shipments of electronics. Smartphone shipments alone surged over 50% year-on-year in December.
The current account, measured on a four-quarter rolling basis, rebounded to almost 5% of GDP by the third quarter of the previous year, thanks to resilient remittances, rising tourism receipts, and improved trade dynamics.
Vietnam’s robust services sector continues to provide crucial support to the economy, expanding by over 7% year-on-year in the last quarter.
The country targets attracting 18 million tourists in 2024, compared to 12.6 million in 2023. However, the challenge lies in a fierce competition for Chinese tourists with regional peers, as Thailand, Malaysia, and Singapore have introduced visa-free schemes or announced similar initiatives.
Regarding foreign direct investment, HSBC acknowledges the potential impact of the new global minimum tax but deems it manageable. While tax is a significant factor in investment decisions, it’s not the sole determinant for FDI inflows.
