HSBC warns Vietnam of underperformance next decade

Source: Pano feed

Thuy Trieu


The bank’s researchers in a new report on Asian economies expect the country GDP growth this year would slightly increase to 5.1% from the level of 5% in 2012. The 5.1% level is lower than the country’s target of 5.5% set by the Government early this year.


Weak domestic demand reflected through low credit growth continues to hammer economic activities. Major growth indicators, including HSBC manufacturing PMI, consumer price index, and trade prints reflect sluggish domestic activities, said the report published by the bank’s global research department.


“The second half of the year could determine whether Vietnam will muddle through or resume its former fast growth in the next decade. Although some signs of progress are in place including the Prime Minister’s approval of the asset management corporation (AMC), evidence of sweeping changes to improve corporate governance is not yet seen,” said the report.


Exports, especially manufactured goods of the foreign-invested sector, are supporting the economy, contributing to final demand and employment growth. Electronics, textile and garment manufacturing are expanding robustly while commodity exports are being hit by weak global prices. This trend is forecast to continue for the rest of the year, said the report.


Inflation will be under the Government’s control given weak domestic demand and low global commodity prices. HSBC expects this year’s consumer price index will increase 5.9% compared to 8% last year.


However, as revenue collection is decreased due to falling corporate tax, value added tax especially import VAT, the Government can potentially raise the costs of public services.




Đăng ký: VietNam News

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