(VOVWORLD) - Vietnam is on track for recovery, likely returning to growth of 6% this year, according to HSBC's "Vietnam at a Glance" report released on Thursday.
Despite rough waters, the report said Vietnam’s outlook remained optimistic at the end of 2023, anticipating a strong emergence in the coming year. The fourth quarter of last year saw a 6.7% year-on-year growth in GDP, resulting in an annual growth rate of 5.1%. This aligned with HSBC's 5% forecast, upheld for six months, even as the consensus lowered the forecast to 4.6%.
HSBC economists say Vietnam is ushering in a more hopeful Year of the Dragon due to sustained foreign direct investment (FDI) inflows. Both total and new FDI were close to their historical high in 2023, particularly with new FDI jumping to a four-year high of 5% of GDP. New manufacturing FDI soared to a new high of 15 billion USD. This puts Vietnam just behind Malaysia in ASEAN.
Think tanks said that, despite a rosy picture, risks to trade and inflation warrant a closer look. As Vietnamese inflation remained under control in 2023, averaging 3.3%, it fell in line with expectations. This leaves plenty of space below its inflation ceiling of 4.5%, with experts expecting inflation to remain benign in 2024, at 3.4%, well below the new inflation target of 4 to 4.5%.
As FDI keeps boosting production capacity, Vietnam's manufacturing sector is showing signs of recovery, creating opportunities for exports, according to the report.