Viet Nam back as ASEAN’s growth star: HSBC

The above statement was highlighted in an article "2024–a look back at ups and downs" released by HSBC on December 20.

In particular, growth improved and surprised on the upside, rising to 6.9 percent and 7.4 percent in the second quarter and third quarter respectively. The recovery in the external sector has started to broaden out beyond consumer electronics, although the domestic sector remained relatively muted despite seeing incremental improvements.

There were concerns that the impact of Typhoon Yagi, the strongest storm Viet Nam faced in 70 years, would weigh on growth. Meanwhile, manufacturing and trade remained resilient and continued to lead the recovery.

On FDI, Viet Nam continued to attract foreign inflows as fundamental prospects remain positive. Although growth in newly registered FDI moderated in the third quarter, sectors beyond manufacturing such as real estate and energy saw increases in investment. A total of US$21.68 billion was disbursed, up 7.1 percent year-on-year.

This marks the third consecutive year in which Viet Nam's FDI disbursement exceeded US$20 billion. Intra-ASEAN investments are leading the way, making up 40 percent of inflows to date. Existing investors continue to make commitments, supporting Viet Nam's expanding manufacturing capabilities. 

Foreign investment into the real estate sector has also risen over recent months. This is likely being supported by the revised Land Law effective August, which relaxed some regulations to spur demand.

Looking ahead, manufacturing inflows are also likely to remain resilient, with General Secretary To Lam's recent visit to the U.S. yielding investment intentions from various firms such as Meta. Shunsin, a subsidiary of Foxconn, reportedly sought for a permit to invest US$80 million to produce integrated circuits in the northern province of Bac Giang, indicative of improving production capabilities in Viet Nam.

It is not just electronics manufacturing, but also other high value-add sectors that have been generating interest from notable multinational corporations, with Google set to launch its Viet Nam office in April 2025 and NVIDIA to open a R&D center to develop AI in the country.

Authorities also continue to actively expand and enhance diplomatic ties, with Viet Nam recently elevating ties with France to Comprehensive Strategic Partnership and signing a comprehensive economic partnership agreement with the United Arab Emirates (UAE).

Given the strong recovery momentum in the third quarter, HSBC Global Research has raised its GDP forecast for 2024 to 7 percent (from the previous prediction of 6.5 percent), while maintaining GDP forecast for 2025 at 6.5 percent./.