HSBC forecasts State’s growth target of 6.7% will be achieved
HSBC maintains its 2016 GDP forecast of 6.7% year-on-year for Vietnam as the dual engine of domestic demand and exports are expected to stay strong.
The bank’s report “Vietnam at a glance, Great expectations” released on January 5 said Vietnam’s economy “hit a sweet spot” in 2015 with GDP growing 6.7%, the fastest pace in eight years while inflation weakening to 0.6%.
GDP of last year’s fourth quarter rose by 7.1 percent, putting full-year growth at 6.7%, above the government’s target of 6.2%.
Domestic demand was the key driver behind the rise, giving a push to service sector. Full-year consumption expanded 9.1% year-on-year, surpassing growth of 6.5% in 2014.
In contrast to the significant GDP growth, inflation slowed further to 0.6% in 2015 due to falling prices of energy, foods and core commodities.
“The Government has set the 2016 growth target at 6.7%, which we think will be achieved”, the report stated.
The inflation is projected to rebound in the second half of 2016, urging the State Bank of Vietnam to shift into a tightening mode. The uncertainty around this forecast is quite high as the path of oil prices is difficult to predict.
“Together with base effects from stabilizing oil prices and a likely pick-up in food inflation”, it warned that headline inflation may move up to 3% year-on-year in the first half of this year and hit 5.1% year-on-year by the end of the second half.
GDP of last year’s fourth quarter rose by 7.1 percent, putting full-year growth at 6.7%, above the government’s target of 6.2%.
Domestic demand was the key driver behind the rise, giving a push to service sector. Full-year consumption expanded 9.1% year-on-year, surpassing growth of 6.5% in 2014.
In contrast to the significant GDP growth, inflation slowed further to 0.6% in 2015 due to falling prices of energy, foods and core commodities.
“The Government has set the 2016 growth target at 6.7%, which we think will be achieved”, the report stated.
The inflation is projected to rebound in the second half of 2016, urging the State Bank of Vietnam to shift into a tightening mode. The uncertainty around this forecast is quite high as the path of oil prices is difficult to predict.
“Together with base effects from stabilizing oil prices and a likely pick-up in food inflation”, it warned that headline inflation may move up to 3% year-on-year in the first half of this year and hit 5.1% year-on-year by the end of the second half.