HSBC points out three challenges for Vietnam’s economy in H2
A woman works at a textile and garment factory. HBSC has lowered its growth forecast for Vietnam this year from 6.6% to 6.1% - PHOTO: VNA
HCMC - Ngo Dang Khoa, country director of foreign exchange and capital markets at HSBC Vietnam, has suggested three challenges that the Vietnamese economy would face in the second half of this year.
HBSC has recently lowered its economic growth forecast for Vietnam this year from 6.6% to 6.1% following the fourth wave of Covid-19, which is the worst outbreak since the start of the pandemic.
Regarding the macro economy, the latest outbreak has caused disruptions in supply chains and would affect the sustainable recovery of the Vietnamese economy in the long term.
“With the closure of industrial parks and a long period of social distancing, Vietnam’s economic growth will definitely face many challenges in the third quarter and the second half of 2021 as a whole,” he said.
Social distancing measures to curb the spread of the coronavirus have also affected the consumption outlook and the recovery of the services and tourism industries.
Besides, the new variants of Covid-19 and the slow vaccination progress would delay the reopening of borders to foreign investors and tourists.
“Timely fiscal and monetary policies are needed to help businesses and citizens overcome difficulties,” he suggested.
In terms of the exchange rate, it would be hard to maintain a stable Vietnam dong-U.S. dollar exchange rate in the second half given Vietnam’s trade deficit, inflation worries and the possible rise in U.S. interest rates. Khoa predicted the dong-dollar exchange rate to be VND23,100 per dollar by the end of this year.
According to Khoa, unlike Western countries, Vietnam and other Asian countries have yet to see inflationary pressure. However, if prices continue to increase, the State Bank of Vietnam might have to raise interest rates.
He suggested that Vietnam should not increase interest rates too early or too quickly as the economy is severely affected by the pandemic.
Despite many challenges, HSBC still forecast a positive outlook for the Vietnamese economy in 2022 thanks to its strong motivation for economic growth.
The bank has revised upward its forecast for Vietnam’s economic growth next year to 6.8% from the previous 6.5%.
“Once the pandemic is brought under control, Vietnam will benefit from strong recovery driven by technology development and foreign direct investment, becoming one of the most potential countries in the region,” Khoa concluded.
- World News in Brief: August 4
- Vietnam News Today August 5 Vietnam Team Train Behind Closed Doors Ahead of World Cup Qualifiers
- Olympics: Athletics- Gold for De Grasse, another huge 400m hurdles record
- Additional 7,623 COVID-19 cases, infections in Ho Chi Minh City halve
- Health Ministry announces 3,352 more Covid-19 cases
Over VND24 trillion proposed for expressway linking HCMC, Binh Duong, Binh Phuoc
Vietnam to be the world’s biggest garment exporter
Delivery startup Loship raises $12 mln from foreign investment fund
EVFTA, CPTPP bring about great economic benefits for Vietnam
Ministry to propose halving taxes for household, individual businesses
M1 Launches the Most Advanced 5G Standalone Technology in Singapore with its True 5G Network
80% of Global Organizations Expect to Experience a Breach of Customer Records in the Next Year
Cyberport, Ericsson, SmarTone and Unissoft Join Hands to Develop New 5G Applications, Form Hong Kong's First 5G Edge Computing Deployment Scenario Used at Cyberport and Unleash the Power of 5G Technology
Vallen Poised for Business Expansion and Captures New Revenue Stream in the Cloud with Infor
Condominium "The Seasons Residence" in Manila, Philippines, Receives the Highest Award in the Philippines and Five Stars in the Asia Pacific Region in "International Property Awards" Recognizing Excellent Real Estate Projects