Standard Chartered forecasts Vietnam’s 2021 GDP Growth at 7.8%
Standard Chartered expects Vietnam’s GDP growth to rebound to 7.8% in 2021 from 2.9% in 2020, with manufacturing likely continuing to drive the economy and helping Vietnam outperform the rest of Asia.
This forecast is highlighted at Standard Chartered’s Global Research Briefing held virtually today, drawing senior representatives from over 100 local and foreign corporate clients, Standard Chartered elucidated in a press release.
The annual event discusses Standard Chartered’s recently published Global Focus - Economic Outlook 2021 report entitled “The road to redemption”, and its latest Global Research report on Vietnam entitled ““Vietnam – 2021: Strong recovery expected.”
Tim Leelahaphan, Economist, Thailand and Vietnam, Standard Chartered, said: “The economy emerged from the worst of the Covid-19 downturn in Q3-2020, and we think the recovery remains intact. Vietnam has been one of the best-performing economies globally for the past decade, and we expect this to continue.”
Standard Chartered’s economists anticipated that improving investment and services growth should support the economy in the coming years. Effective Covid-19 containment measures have further enhanced Vietnam’s appeal to overseas investors, making it an attractive destination globally for foreign direct investment. The country stands to benefit from trade and technology tensions between the US and China, which is expected to continue under the new US administration. Significant supply-chain relocation is already underway as a result of the US-China trade war. Lingering global demand uncertainty and depressed investment sentiment are likely to weigh on FDI inflows, but inward investment should remain strong.
“Vietnam is a clear beneficiary, and we expect this trend to continue in the next couple of years as tensions persist. Vietnam will continue to serve as an alternative destination as countries and companies seek to reduce their reliance on manufacturing in China. This is positive for the country’s medium- to long-term growth prospects,” added Leelahaphan.
The macro-economic report also suggested that increased competition may force Vietnam to improve its product and supply chains as the country looks to become a high-tech manufacturer. That may require increased productivity, education and technology transfer, among other factors. The Regional Comprehensive Economic Partnership (RCEP) could provide opportunities for local SMEs to move up the value chain with simplification of procedures. Manufacturers in advanced countries such as China, South Korea and Japan may consider minimising costs by outsourcing final processing steps to less expensive ASEAN countries such as Vietnam to achieve cost benefits.
Standard Chartered is hosting a series of webcasts, forming part of the 2021 Standard Chartered Global Research Briefing series, which aims to provide the Bank’s clients in-depth insight and analysis on global, regional and local socio-economic trends that will have an impact on international business and trade in the year ahead.
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