Vietnam's growth, though not stellar, is continuing, as latesthigh-frequency indicators suggest domestic demand is rebounding, albeitat a gradual pace, according to HSBC's Asian Economics quarterly report.
Accordingto the report, retail sales expanded 13 percent year-on-year inFebruary, driven by services and tourism, marking an 11.4 percentincrease. Also, imports surged, rising 20.7 percent over the beginningof the year.
Most of the increase was due to higher inputimports, suggesting that exports will increase in the months ahead.While exports expanded modestly, at 7.6 percent over the same periodlast year, the rate of increase would be positive, overall, consideringthe downturn of the commodity cycle.
With the exception of cashewnuts and tea, however, all commodity exports contracted. What ismaintaining the trade figures is Vietnam's rising competitiveness inlabour-intensive manufacturing, noting that textiles, footwear,electronics and phones all rose sharply. Further, the bank expected thatoutput would continue to expand in the months ahead.
TheFebruary PMI mirrors this rising output, despite a decline in new exportorders. In spite of slowing global demand, the country's exports wereexpected to rise, thanks to a steady increase of FDI inflows. Domesticdemand will also likely stage a modest recovery.
After a sharpdeceleration in 2011, domestic demand has gradually improved, though itremains weak. The drop in oil prices will likely boost consumerpurchasing power, both directly, due to lower oil and transportationcosts, and indirectly, as producers pass on savings to consumers bylowering output prices. Gradually rising income is another reason forimproving consumer demand.
HSBC forecast private consumption to accelerate to 5.6 percent in 2015, from 5.4 percent in 2014.
Vietnamremains a net importer of petroleum, with the decline in oil pricesbolstering its trade position. It is also trade-intensive, especiallythe non-oil trade, which means that producers and exporters will benefitfrom lower input costs. Low inflation will additionally give thegovernment space to raise social service costs, as well as electricityprices. The State Bank of Vietnam would further be tempted to cut theopen market operation (OMO) rate by 50bp to 4.5 percent.-VNA
Accordingto the report, retail sales expanded 13 percent year-on-year inFebruary, driven by services and tourism, marking an 11.4 percentincrease. Also, imports surged, rising 20.7 percent over the beginningof the year.
Most of the increase was due to higher inputimports, suggesting that exports will increase in the months ahead.While exports expanded modestly, at 7.6 percent over the same periodlast year, the rate of increase would be positive, overall, consideringthe downturn of the commodity cycle.
With the exception of cashewnuts and tea, however, all commodity exports contracted. What ismaintaining the trade figures is Vietnam's rising competitiveness inlabour-intensive manufacturing, noting that textiles, footwear,electronics and phones all rose sharply. Further, the bank expected thatoutput would continue to expand in the months ahead.
TheFebruary PMI mirrors this rising output, despite a decline in new exportorders. In spite of slowing global demand, the country's exports wereexpected to rise, thanks to a steady increase of FDI inflows. Domesticdemand will also likely stage a modest recovery.
After a sharpdeceleration in 2011, domestic demand has gradually improved, though itremains weak. The drop in oil prices will likely boost consumerpurchasing power, both directly, due to lower oil and transportationcosts, and indirectly, as producers pass on savings to consumers bylowering output prices. Gradually rising income is another reason forimproving consumer demand.
HSBC forecast private consumption to accelerate to 5.6 percent in 2015, from 5.4 percent in 2014.
Vietnamremains a net importer of petroleum, with the decline in oil pricesbolstering its trade position. It is also trade-intensive, especiallythe non-oil trade, which means that producers and exporters will benefitfrom lower input costs. Low inflation will additionally give thegovernment space to raise social service costs, as well as electricityprices. The State Bank of Vietnam would further be tempted to cut theopen market operation (OMO) rate by 50bp to 4.5 percent.-VNA
