Prospects remain bright for Vietnam economy despite geopolitical conflicts: UOB

By Quang Minh
Tue, April 2, 2024 | 11:21 am GMT+7

With performance in the first quarter coming within expectations and a positive start to 2024, prospects for Vietnam this year remain positive despite downside risks stemming from geopolitical tensions, Singapore-based UOB said in a note.

Conflicts between Russia and Ukraine and between Israel and Hamas could disrupt global trade and energy/commodity markets, UOB analysts clarified.

Vietnam's Q1 exports and imports’ rise at the fastest pace since 2021, being a key driver for the robust GDP growth outcome in Q1/2024. Photo courtesy of UOB.

Vietnam's Q1 exports and imports’ rise at the fastest pace since 2021, being a key driver for the robust GDP growth outcome in Q1/2024. Photo courtesy of UOB.

Nonetheless, the recovery in the semiconductor cycle, stable growth in China and the region, and the likely easing of monetary policy by major central banks in the months ahead will support the outlook for the year.

The analysts, therefore, reaffirmed their growth forecast for Vietnam at 6% for 2024, compared to the official 6-6.5% growth target.

According to the General Statistics Office, Vietnam’s real GDP rose 5.66% year-on-year in Q1, extending the momentum of 6.72% in Q4/2023 and 5.33% in Q3/2023, and well ahead of the 3.41% gain posted in the same quarter the previous year, making it the best Q1 performance from 2020 to 2023. UOB named it “a promising start for the year” after a challenging 2023.

One key driver for the robust growth outcome in Q1 has been external trade, with both exports and imports’ rising at the fastest pace since 2021, boosted by strong demand for products such electronics and phones.

Despite the ongoing Russia-Ukraine conflict and dark clouds of shipping disruptions in the Red Sea, exports of goods surged 17% year-on-year while imports gained 13.9% in Q1, resulting in a trade surplus of $8.08 billion. This was a sharp turnaround after both exports and imports declined through most of 2023, resulting in contractions of 5% and 9%, respectively, for the full year 2023.

The analysts go on to say that recent development in the political arena – the resignation of President Vo Van Thuong late last month – is unlikely to affect the country’s broad policy direction.

“Thuong’s predecessor also stepped aside abruptly the prior year, and that hardly dented investors’ actions of bringing in a record FDI of $23.2 billion in 2023. As such, Vietnam’s long-standing policy of welcoming investors and businesses is unlikely to be affected as the government sorts out the succession issue,” UOB analysts reckon.

Asset management firm VinaCapital commented last month that the surprise resignation of President Thuong after being in office for only a year will have no bearing on Vietnam’s economic development or other policies.

“While this sort of news is unwelcome, we believe that it will have no effect whatsoever on Vietnam’s economic development strategy. This has remained remarkably consistent over the last two decades, irrespective of the individuals holding the key positions,” the firm said.

Looking ahead, UOB anticipated that the State Bank of Vietnam (SBV) is unlikely to further cut rates because of accelerating economic activities and better growth prospects in 2024. However, this should not be ruled out totally.

The recent acceleration of inflation rates could see the SBV proceeding even more cautiously in any changes in its policy rates. As such, they believe the SBV will maintain its refinancing rate at the current level of 4.50% for now.

Instead of further lowering interest rates which are constrained by the lower bound, the government has turned its focus to non-interest rate measures to support the economy.

In its “East Asia and Pacific April 2024 Economic Update” released Monday, the World Bank kept its growth projections for Vietnam’s GDP at 5.5% for 2024 and 6% for 2025, unchanged from its forecasts in October 2023, despite the country’s Q1 growth hitting a five-year high on a quarterly basis.

Similarly, Standard Chartered last week kept its 2024 GDP growth projection for Vietnam at 6.7%, with growth accelerating from 6.2% year-on-year in the first half to 6.9% in the latter half.

Comments (0)
  • Read More
Where real estate and urban development meet

Where real estate and urban development meet

The Transit-Oriented Development (TOD) itself, if properly planned and implemented, can lower the barrier to the use of public transport, lessen the dependency on private vehicles, contributing to the liveability of communities and cities, write Avison Young Vietnam analysts.

Consulting - Mon, November 4, 2024 | 8:49 pm GMT+7

AI helps sellers offer competitive prices on e-commerce platforms: Lazada trainer

AI helps sellers offer competitive prices on e-commerce platforms: Lazada trainer

When sellers carry out promotions on e-commerce platforms, artificial intelligence can help ensure their prices remain competitive, says Nguyen Tran Tin, a seller and trainer at Lazada Academy.

Companies - Mon, November 4, 2024 | 8:07 pm GMT+7

Vietnam plans $7.3 bln rail route linking 2 northern provinces bordering China

Vietnam plans $7.3 bln rail route linking 2 northern provinces bordering China

Vietnam Railway Authority under the Ministry of Transport has proposed a 448-km long, VND183,856 billion ($7.26 billion) route running between the northern provinces of Lao Cai and Quang Ninh, both sharing a border with China.

Infrastructure - Mon, November 4, 2024 | 7:14 pm GMT+7

Vietnam agribusiness HAGL trains focus on domestic market, inks pact with Kingfoodmart

Vietnam agribusiness HAGL trains focus on domestic market, inks pact with Kingfoodmart

Vietnamese agri major Hoang Anh Gia Lai JSC (HAGL) is looking to tap domestic market potential afresh by distributing its products through the Kingfoodmart supermarket chain.

Companies - Mon, November 4, 2024 | 7:08 pm GMT+7

Mixed performance by Vietnam commercial banks in Q3

Mixed performance by Vietnam commercial banks in Q3

Vietnamese commercial banks have had a mixed third quarter, with some reporting substantial profit gains while others seeing steep declines or even losses.

Banking - Mon, November 4, 2024 | 4:52 pm GMT+7

Vietnam’s Vingroup, UAE's NMDC to collaborate in offshore wind power

Vietnam’s Vingroup, UAE's NMDC to collaborate in offshore wind power

Vietnam’s leading conglomerate Vingroup and the UAE-based NMDC Group will collaborate in offshore wind power, the latter said in a recent filing sent to the Abu Dhabi Securities Exchange (ADX).

Energy - Mon, November 4, 2024 | 4:20 pm GMT+7

Military-run Viettel Group has 2 more deputy general directors

Military-run Viettel Group has 2 more deputy general directors

General Phan Van Giang, Minister of National Defence, has appointed Cao Anh Son and Nguyen Dat as deputy general directors of Military Industry and Telecommunications Group (Viettel Group), starting last Friday.

Companies - Mon, November 4, 2024 | 3:14 pm GMT+7

Mega Long Thanh airport first phase should be completed in Sept 2026: senior parliament official

Mega Long Thanh airport first phase should be completed in Sept 2026: senior parliament official

Relevant agencies should prepare to complete the first phase of the $14-billion Long Thanh International Airport project on September 2, 2026, as soon as the Vietnamese National Assembly approves changes to the project, said a senior parliament member.

Infrastructure - Mon, November 4, 2024 | 12:44 pm GMT+7

Fed rate cuts, upgrading efforts to lure foreign investors back into Vietnam stock market: VinaCapital

Fed rate cuts, upgrading efforts to lure foreign investors back into Vietnam stock market: VinaCapital

The U.S. Fed’s rate cut cycle and the Vietnamese government’s fresh efforts to upgrade the local stock market status are likely to bring foreign investors back into the stock market next year, according to VinaCapital.

Finance - Mon, November 4, 2024 | 11:42 am GMT+7

Foxconn’s subsidiary Shunsin to invest $80 mln in northern Vietnam to produce integrated circuits

Foxconn’s subsidiary Shunsin to invest $80 mln in northern Vietnam to produce integrated circuits

Shunsin Technology (Bac Giang, Vietnam) Limited, a subsidiary of Taiwanese giant Foxconn, will invest $80 million in Vietnam’s northern province of Bac Giang to produce integrated circuits (IC).

Industries - Mon, November 4, 2024 | 10:44 am GMT+7

Q3 earnings of Vietnam’s listed firms up 21.6%: FiinGroup

Q3 earnings of Vietnam’s listed firms up 21.6%: FiinGroup

Net profits of listed companies in Vietnam increased 21.6% year-on-year in the third quarter of this year, maintaining a stable growth rate since the start of this year, according to local financial data provider FiinGroup.

Finance - Mon, November 4, 2024 | 9:31 am GMT+7

Thailand SCG’s revenue in Vietnam up 15% to $1.1 bln in Jan-Sept

Thailand SCG’s revenue in Vietnam up 15% to $1.1 bln in Jan-Sept

Thailand’s Siam Cement Group (SCG) recorded a revenue of THB36.71 billion ($1.08 billion) in Vietnam in the first nine months of this year, up 14.7% year-on-year.

Companies - Mon, November 4, 2024 | 8:00 am GMT+7

Nghiem Xuan Thanh appointed Party chief of Khanh Hoa province

Nghiem Xuan Thanh appointed Party chief of Khanh Hoa province

Nghiem Xuan Thanh, Party chief of Hau Giang province, was appointed by the Politburo, the country’s supreme decision-making body, to be Khanh Hoa province’s Party chief for the 2020-2025 term.

Politics - Sun, November 3, 2024 | 7:45 pm GMT+7

Thailand seeks FTA negotiations with Eurasian Economic Union

Thailand seeks FTA negotiations with Eurasian Economic Union

Thailand is holding talks with Russia to expedite negotiations for a free trade agreement (FTA) with the Eurasian Economic Union (EAEU).

Southeast Asia - Sun, November 3, 2024 | 7:20 pm GMT+7

Indonesia attracts foreign investment in technology sector

Indonesia attracts foreign investment in technology sector

As many as 19 Australian companies have expressed an interest in investing in Indonesia's technology sector, Communication and Digital Affairs Minister Meutya Hafid said on Thursday.

Southeast Asia - Sun, November 3, 2024 | 7:18 pm GMT+7

Robots work hard, don’t argue: Viettel exec counsels effective use of technology

Robots work hard, don’t argue: Viettel exec counsels effective use of technology

Small businesses in logistics should look to use existing tools, software and technology solutions effectively, says Dinh Thanh Son, deputy CEO of Viettel Post.

Companies - Sun, November 3, 2024 | 4:30 pm GMT+7