Vietnam, Cambodia regional exceptions to falling manufacturing trend: World Bank

By Nguyen Thuy
Fri, March 31, 2023 | 3:35 pm GMT+7

Manufacturing as a share of output has peaked in most East Asia and Pacific (EAP) economies and began to decline among early industrializers, but still-industrializing Vietnam and Cambodia were the exceptions to this trend, the World Bank said Friday.

Singapore’s United Overseas Bank (UOB) trimmed its 2023 GDP growth forecast for Vietnam down to 6% from the 6.6% earlier this week. Photo courtesy of Vietnam News Agency.

Singapore’s United Overseas Bank (UOB) trimmed its 2023 GDP growth forecast for Vietnam down to 6% from the 6.6% earlier this week. Photo courtesy of Vietnam News Agency.

In its April economic update released in Washington D.C., the bank noted EAP countries had experienced two decades of faster and less volatile growth compared to other economies until some 25 years ago.

But after the Asian financial crisis of 1997-1998, “the region saw only limited structural reforms and therefore little productivity-enhancing structural change,” the Washington D.C.-based lender said.

And despite being open to trade and investment in manufacturing, it remained “reluctant” to liberalize service sectors. As a result, productivity growth in many regional economies has been declining since the global financial crisis of 2008-2009.

“Limited growth in labor productivity had been driven more by capital deepening than total factor productivity growth,” the bank said. These trends in growth and productivity have coincided with a shift in the pattern of structural change."

In the decade between the Asian and global financial crises, “the share of manufacturing in GDP peaked and began to decline in the early industrializers” but “Cambodia and Vietnam were the exceptions to this trend.”

The bank’s April update revised downward its forecast for Vietnam at 6.3% this year, down from 6.7%. Cambodia’s GDP forecast for this year is unchanged at 5.2%.

Similarly, lower forecasts are also made for Indonesia (to 4.9% from 5.1%); 5.6% for the Philippines (down from 5.8 percent; 3.6% for Thailand (down from 4.1%). The prediction for Myanmar is 3% this year (no forecast was available in October).

The bank upwardly revised forecasts to 5.1% for China (from 4.5%), 3.9% for Laos (from 3.8%), and 4.3% for Malaysia (from 4.2%).

The global institution said it expected growth in the EAP region, which includes China, to pick up to 5.1%, up from its 3.5% growth last year, thanks to China's reopening and economic rebound, but high inflation and household debt will weigh on consumption in some countries.

"Most major economies of East Asia and the Pacific have come through the difficulties of the pandemic but must now navigate a changed global landscape," said the World Bank's vice president for the region, Manuela Ferro.

"To regain momentum, there is work left to do to boost innovation, and productivity, and to set the foundations for a greener recovery."

Economies of the region must also cope with three important challenges as policymakers act to sustain and accelerate economic growth in the aftermath of Covid-19. Rising tensions between major trading partners will affect trade, investment, and technology flows across the region. The rapid aging of the major economies of East and Southeast Asia heralds a new set of challenges and risks with implications for economic growth, fiscal balances, and health.

Finally, the bank said, the region is particularly exposed to climate risks, in part due to the high density of population and economic activity along its coasts.

Also Friday, Singapore’s United Overseas Bank (UOB) trimmed its 2023 GDP growth forecast for Vietnam down to 6%, compared with the 6.6% UOB put earlier this week. The updated 6% is lower than the World Bank’s 6.3%.

UOB said, “The revised projection assumes a rebound of GDP growth to 5.9% year-on-year in the second quarter of this year, and an average pace of 7.4% year-on-year in the second half of this year on the back of a recovery in global demand and strengthening of domestic services activities.”

Vietnam posted economic growth of 3.32% in the first quarter of 2023 compared to a year earlier, the General Statistics Office said Wednesday.

With last year’s 8.02% expansion, the highest in 12 years, Vietnam was one of Asia’s fastest-growing economies. However, the high growth rate in 2022 was partly derived from the low growth base in the pandemic years of 2020-2021, at 2.91% and 2.58% respectively.

Comments (0)
  • Read More
Vietnam's private lender VIB seeks strategic shareholders: chairman

Vietnam's private lender VIB seeks strategic shareholders: chairman

Vietnam International Bank's (VIB) board of directors is now in discussions with banks and investment funds to find suitable partners for the lender, ensuring a mutually beneficial partnership that goes beyond finance.

Banking - Fri, March 28, 2025 | 8:31 am GMT+7

Vietnam tech giant FPT opens semiconductor R&D center in central Vietnam

Vietnam tech giant FPT opens semiconductor R&D center in central Vietnam

Vietnam’s leading tech group FPT on Thursday inaugurated its high-tech and semiconductor R&D center at the Danang Software Park No. 2 in the central city of Danang.

Industries - Fri, March 28, 2025 | 8:00 am GMT+7

HCMC's international financial center development to be phased out: city leader

HCMC's international financial center development to be phased out: city leader

Ho Chi Minh City aims to become an international financial center, with related development plan divided into three phases, said Vo Van Hoan, its Vice Chairman.

Economy - Thu, March 27, 2025 | 11:11 pm GMT+7

Car producers in Thailand postpone export models

Car producers in Thailand postpone export models

Car manufacturers in Thailand have decided to delay making some models for export due to U.S. President Donald Trump's new tariff policy.

Southeast Asia - Thu, March 27, 2025 | 10:17 pm GMT+7

Indonesia approves $7 bln budget for food security in 2025

Indonesia approves $7 bln budget for food security in 2025

Indonesia’s Ministry of Finance on Wednesday announced that the government has approved a budget of IRD118 trillion ($7.1 billion) for food security programs in 2025.

Southeast Asia - Thu, March 27, 2025 | 10:14 pm GMT+7

Honda Vietnam rolls out first domestically produced electric scooter

Honda Vietnam rolls out first domestically produced electric scooter

Honda Vietnam has officially launched its first domestically produced electric scooter, the ICON e:, marking a significant step in the company’s electrification and sustainable mobility strategy in Vietnam.

Southeast Asia - Thu, March 27, 2025 | 10:09 pm GMT+7

Vietnam's Quang Ngai seaport system requires over $420 mln investment by 2030

Vietnam's Quang Ngai seaport system requires over $420 mln investment by 2030

The seaport system in the central Vietnam province of Quang Ngai will need about VND10.83 trillion ($423.54 million) in investment by 2030, according to the detailed 2021-2030 development plan for local seaport land and water areas, with a vision to 2050.

Southeast Asia - Thu, March 27, 2025 | 10:06 pm GMT+7

Leading steelmaker Hoa Phat targets record revenue on partial operation of central Vietnam plant

Leading steelmaker Hoa Phat targets record revenue on partial operation of central Vietnam plant

Hoa Phat Group, Vietnam’s top steelmaker, targets a record-high revenue in 2025, driven by the expected partial operation of a steel and iron complex in the central region this year.

Companies - Thu, March 27, 2025 | 8:10 pm GMT+7

Offshore wind power developer CIP seeks long-term cooperation with Vietnam

Offshore wind power developer CIP seeks long-term cooperation with Vietnam

Copenhagen Infrastructure Partners (CIP), a major Danish renewable energy developer, is seeking to reach long-term cooperation with Vietnamese businesses in the offshore wind power sector.

Energy - Thu, March 27, 2025 | 4:16 pm GMT+7

Vietnam giant VinFast moves to expand EV service in Philippines

Vietnam giant VinFast moves to expand EV service in Philippines

VinFast, Vietnam’s largest electric vehicle (EV) manufacturer, has partnered with MGA.414 Corporation, the operator of the JIGA automotive service chain, to expand its EV service network in the Philippines.

Southeast Asia - Thu, March 27, 2025 | 3:48 pm GMT+7

Vietnam's MobiFone officially launches 5G services

Vietnam's MobiFone officially launches 5G services

MobiFone, one of Vietnam’s leading telecommunications providers, has officially commercialized its 5G services, becoming the third network operator in the country to do so.

Southeast Asia - Thu, March 27, 2025 | 3:45 pm GMT+7

Thanh Cong Group inaugurates first automobile manufacturing plant in Vietnam's Quang Ninh province

Thanh Cong Group inaugurates first automobile manufacturing plant in Vietnam's Quang Ninh province

Vietnamese automaker Thanh Cong Group officially inaugurated its Thanh Cong Viet Hung automobile manufacturing plant on Wednesday at the Viet Hung Industrial Park in the northern province of Quang Ninh.

Southeast Asia - Thu, March 27, 2025 | 3:32 pm GMT+7

Vietnam willing to open doors to US agricultural products: minister

Vietnam willing to open doors to US agricultural products: minister

Vietnam is actively preparing to open its market to U.S. agricultural products such as tangerine, plum, and lemon, Vietnamese Minister of Agriculture and Environment Do Duc Duy said on Wednesday.

Economy - Thu, March 27, 2025 | 3:08 pm GMT+7

S Korea chaebol Lotte eyes hypermarket in northern Vietnam

S Korea chaebol Lotte eyes hypermarket in northern Vietnam

South Korean conglomerate Lotte is eyeing projects in Thai Nguyen province, an industrial hub in northern Vietnam, firstly a hypermarket.

Industries - Thu, March 27, 2025 | 12:15 pm GMT+7

Dubai-based PDSI eyes $2.6 bln investment in tourism-golf course project in central Vietnam

Dubai-based PDSI eyes $2.6 bln investment in tourism-golf course project in central Vietnam

PDSI Group, a Dubai-based real estate and consulting firm, has expressed interest in developing a $2.6 billion commercial, tourism, and golf course complex in Binh Thuan, a south-central coastal province of Vietnam.

Real Estate - Thu, March 27, 2025 | 11:38 am GMT+7

S Korea's SK set to divest from Vietnam's giant Vingroup

S Korea's SK set to divest from Vietnam's giant Vingroup

South Korean chaebol SK Group is set to divest from Vietnamese conglomerate Vingroup, according to the former’s annual report 2024.

Companies - Thu, March 27, 2025 | 11:30 am GMT+7