Strong China stimulus a positive for Vietnamese economy: HSBC economist
China’s recently-announced stimulus package will benefit Vietnam’s economic growth, given the strong links between the two economies, says HSBC chief Asia economist Frederic Neumann.
At a Wednesday seminar held in Hanoi on the release of HSBC’s annual market outlook, he added the caveat of the U.S. economy not falling into recession.
“The stronger the stimulus in China, the better it is for Vietnam, and that means that there's less reason for the State Bank of Vietnam to cut interest rates,” Neumann said.
China’s 2024 economic stimulus package introduces wide-ranging monetary, property and capital market measures aimed at stabilizing the economy and restoring investor confidence. The plan is a response to mounting pressures from a slowing property market, weak consumer demand and global economic uncertainties.
Chinese Finance Minister Lan Foan said last Saturday that the country will issue CNY2.3 trillion (€297 billion or $325.5 billion) in special bonds in the next three months to boost the economy. The aid program is said to be the biggest since the 2007-2008 global financial crisis.
The Chinese government remains committed to achieving 5% growth this year, Neumann noted.
“If the U.S. goes into recession and if China's stimulus doesn't work, the SBV will cut rates,” he added.
For now, HSBC reckons that the U.S. will avoid a recession and China’s stimulus will stem any deceleration even if it does not accelerate its growth.
The U.S. is Vietnam’s largest export market while China is its largest provider of goods.
In case China doesn’t solve its problems of weak consumer spending and overproduction, Neumann said the neighboring giant’s excess capacity will impact Vietnamese companies. In addition, Vietnam will see fewer tourists from China. “This is going to be a drag.”
Elaborating, Neumann said: “How much is that going to impact the Vietnamese economy? If China doesn't solve its problems, I think we leave about half a percentage point of growth on the table, maybe slightly more. If China does bounce back, it will add to the Vietnamese GDP growth rate by about 0.5-0.7 percentage points.”
In its latest macro update on Vietnam, HSBC has projected Vietnam to grow 7% in 2024 and 6.5% in 2025, the highest rates among ASEAN-6.
With this projection, HSBC does not expect the SBV to cut interest rates this year and in 2025. “We think 4.5% is roughly the [policy] rate we're comfortable with here in Vietnam,” said Neumann.
- Read More
Indonesia aims to become center for clinical research in Southeast Asia
The Indonesian Health Ministry on Wednesday announced the establishment of the Indonesia Clinical Research Center (INACRC) to improve the national research system so as to push Indonesia as one of Southeast Asia's centers for clinical research.
Southeast Asia - Thu, October 17, 2024 | 4:16 pm GMT+7
Thailand's rice exports expected to be higher in 2024
Thailand’s rice exports this year are expected to be higher than last year despite the recent flood crisis, according to the Thai Rice Exporters Association (TREA).
Southeast Asia - Thu, October 17, 2024 | 4:13 pm GMT+7
Samsung’s Vietnam subsidiary troubled by troubles in North America, Middle East
Samsung Electronics Vietnam Thai Nguyen (SEVT), the South Korean giant’s biggest subsidiary in Vietnam, says economic turbulence in North America and the Middle East have led to below-expectation results.
Companies - Thu, October 17, 2024 | 4:11 pm GMT+7
Philippines remains the world’s largest rice importer
The Philippines is expected to import more rice in 2024 and the next year, remaining as the world’s top importer of this staple food as the El Nino, La Nina and recent typhoons have curbed domestic production.
Southeast Asia - Thu, October 17, 2024 | 3:08 pm GMT+7
Thailand’s central bank makes surprise interest rate cut
The Bank of Thailand (BoT) on Wednesday unexpectedly cut its key interest rate for the first time in four years, in reply to an appeal by the government to revive a sluggish economy with inflation below target.
Southeast Asia - Thu, October 17, 2024 | 3:07 pm GMT+7
Chinese electric vehicle maker to build plant in Indonesia
China's leading electric vehicle maker PT BYD Motor plans to build an IDR11,700 billion ($754 million) plant in Indonesia, with a capacity of 150,000 EVs per year, a local official said on Wednesday.
Southeast Asia - Thu, October 17, 2024 | 3:06 pm GMT+7
Southern Vietnam province completes site clearance for $3 bln LNG power project
Long An province in southern Vietnam has completed site clearance for the Long An 1 and Long An 2 LNG-to-power project that has a combined investment of $3.13 billion and a capacity of 3,000 MW.
Energy - Thu, October 17, 2024 | 2:19 pm GMT+7
VAFIE partners with UK accountants association on human resources development
The Vietnam’s Association of Foreign Invested Enterprises (VAFIE) and the UK’s Association of Chartered Certified Accountants (ACCA) have signed a memorandum of understanding on strategic cooperation in human resources development.
Companies - Thu, October 17, 2024 | 1:25 pm GMT+7
Vietnam to top GDP growth among emerging markets till 2035: S&P Global
Vietnam is set to become an emerging market with highest GDP growth of 6.2% on average per year, S&P Global says in its report released on Wednesday.
Economy - Thu, October 17, 2024 | 10:04 am GMT+7
Thailand creates favourable condition for cross-border tourism
Thailand has approved an extension of the waiver for TM6 immigration forms for foreign tourists entering through 16 land and sea checkpoints until April 30, 2025.
Southeast Asia - Thu, October 17, 2024 | 9:09 am GMT+7
Thailand launches national economic recovery work
Thai Prime Minister Paetongtarn Shinawatra on Wednesday officially launched Thailand’s national economic recovery project, aimed at supporting small businesses, easing spending, and reducing living costs.
Southeast Asia - Thu, October 17, 2024 | 9:08 am GMT+7
Temporary exit ban lifted for Bamboo Airways CEO
The temporary exit ban for Bamboo Airways CEO Luong Hoai Nam has been removed, Binh Dinh province's tax authorities say in a document sent to the Ministry of Public Security's immigration management department.
Companies - Thu, October 17, 2024 | 9:00 am GMT+7
National pride, desire to contribute motivate Vietnamese to return, work in homeland: Masan exec
National pride and desire to contribute to the nation’s development are key motivations for Vietnamese who have studied and worked abroad to return and work at home, says Nguyen Tam Thanh, chief human resources officer of Masan Group.
Companies - Thu, October 17, 2024 | 8:19 am GMT+7
Vietcombank the second largest shareholder of Eximbank
State-controlled giant Vietcombank has become the second largest shareholder of private lender Eximbank after Gelex, holding 78.9 million EIB shares, or a 4.51% stake, as of October 10.
Banking - Wed, October 16, 2024 | 11:01 pm GMT+7
S Korean firms seek to join high-speed railway, LNG-fired power projects in Vietnam
Many South Korean businesses seek to join strategic infrastructure projects in Vietnam, including high-speed railways, LNG-fired power plants, and nuclear power factories, said Yoon Suk Yeol, special advisor on foreign affairs and security to the South Korean President.
Infrastructure - Wed, October 16, 2024 | 5:17 pm GMT+7
$2.4 bln coal-fired power plant in central Vietnam to connect with national grid in Dec
The 1,320-MW Vung Ang II thermal power plant, with an investment of $2.4 billion, is set to run its first turbine in late October and connect the turbine to the national grid in December.
Energy - Wed, October 16, 2024 | 4:57 pm GMT+7