HSBC pegs Vietnam’s growth at 6% in 2024

The country ended last year with a 5.1% growth, but in the last quarter alone the economy expanded 6.7%, showing a glimmer of hope for better growth prospects going forward, the U.K.-based bank said in a recent report.

The manufacturing sector, one of Vietnam’s key growth engines, saw a notable improvement in the second half of the year from extreme sluggishness in the first.

Vietnam has finally saw its exports grow close to double digits again in the fourth quarter, largely led by rising electronics shipments. Smartphone shipments rose over 50% year-on-year in December alone.

Thanks to resilient remittances, rising tourism receipts, and improving trade dynamics, the current account, measured on a four-quarter rolling basis, returned almost to 5% of GDP as of the third quarter last year, on par with its historical highs.

Vietnam’s robust services continue to provide much-needed support to the economy. The sector expanded over 7% year-on-year in the last quarter.

The country is aiming to lure 18 million tourists in 2024, up from 12.6 million in 2023, but the country is facing an intense race as regional peers are also vying for Chinese tourists.

Thailand and Malaysia have both implemented visa-free schemes for Chinese tourists since the last quarter, while Singapore has announced a similar scheme with details to be unveiled in the new year.

In terms of foreign direct investment, the new global minimum tax might have an impact, but it should be manageable, HSBC said.

When it comes to investment decisions, tax is a key factor, but not the only factor in determining FDI inflows.

It is important to improve on other metrics, such as infrastructure connectivity, the availability of a skilled workforce, ease of doing business and free trade agreements.

The bank expects Vietnam’s inflation to be at 3.4% this year, against the target of 4-4.5%.