Standard Chartered: VN’s economy to grow 3% in 2020, surge to 7.8% in 2021

Rising consumption on improving sentiment, and faster manufacturing will drive growth in the fourth quarter this year, Standard Chartered noted.

 “Viet Nam is one of the few Asian economies to have registered positive growth so far this year, despite the second wave of infections”, said Chidu Narayanan, economist for Asia, Standard Chartered Bank.

He expected that improving services growth and infrastructure investment should help Viet Nam outperform the rest of Asia, expressing his positive view on Viet Nam’s medium- and long-term economic outlook.  

The report showed that both exports and imports are expected to increase as a result. Trade is likely to remain in surplus for the rest of 2020 as exports and imports move in tandem.

Construction activity is anticipated to improve in Q4, supported by increased public infrastructure investment.

Private consumption, accounting for nearly 68% of GDP, should grow strongly in Q4 on improving domestic sentiment. Private investment, however, is likely to remain subdued on lingering uncertainty about medium-term demand.

Standard Chartered’s economists forecasted that newly registered FDI inflows into Viet Nam will decline in 2020, but remain strong at close to US$13 billion.

The report also supposed that the Vietnamese central bank will remain accommodative in the near term to support growth. The central bank cut the policy rate by a further 50bps to a historical low of 4% on October 1. The central bank’s 200bps of rate cuts in the year to date and the reopening of the economy should aid further credit growth in the near term.

By Thuy Dung