Illustrative image (Source: VNA)Hanoi (VNA) - Vietnam’s expansion hascharged ahead despite the recent financial and trade turmoil, which hasaffected many Southeast Asian emerging markets, Moody’sInvestors Service said in a recently-announced report.
In its report “Vietnam Outlook:Resiliency Amid Emerging Market Uncertainty”, Moody’ssaid following 6.8 percent real GDP growth in 2017, Vietnam’s GDP growthwill continuously maintain an expansion of 6.7 percent in 2018.
According to the report, the positive economic outlook is supported byburgeoning electronic and textile exports, a modest recovery in agriculture,and steady inflows of foreign investment.
Additionally – unlike in years past – a strong domesticmarket will further support headline growth, it said, adding that with tourismtraffic at a record high in the first nine months of this year and a healthylabour market, consumer sales have been rising at a double-digit clip sincelast year.
Trade remains the primary driver for continued expansion within Vietnam, itsaid, giving analysis that Vietnam’s low cost of labour and comparatively youngand growing population make it an attractive locale for manufacturers.
As a result, the improved trade balance increased Vietnam’scurrent account surplus to an estimated 6.6 percent of GDP in the secondquarter of 2018 from 5.1 percent of GDP in 2017.
Driven in part by the trade tensions, multinational companies – including LGand Samsung - have been shifting some production from China to other areas,including Vietnam, the report noted.
However, global trade frictions and a strengthening USD havehurt Vietnam’s financial market this year, although less so than other emergingmarkets.
Moody’s said Vietnam’s current account surplus and largeforeign reserves will continue to position the economy better than otheremerging markets facing widening current account deficits.
Moody’s said it expects the State Bank ofVietnam (SBV) to maintain a neutral stance through the end of the year,deviating from a handful of other central banks in Asia.
SBV is largely content with how economic conditions areplaying out this year, and wants to maintain an environment that supportsforeign investment into the country, it noted.
According Moody’s, sound macroeconomicpolicy and further structural reforms are vital for continued growth in themedium and long term, and policymakers are working on stabilising the Government’sdebt load, as Vietnam’s public debt rose to an estimated 63.7 of GDP in 2017.-VNA
VNA
