Vietnam: Economy expected to grow 3.5% this year – UOB

Suan Teck Kin, CFA, Head of Research at UOB Group, reviewed the growth prospects for Vietnam following Q2 GDP figures.

Key Quotes

“Despite impact from COVID-19 pandemic, Vietnam’s economy managed to expand 0.36%y/y in 2Q20, but with a sharp deceleration from 3.68% in 1Q20, as activities likely to have experienced the worst of the impact from the pandemic.”

“Activities across the broad economy decelerated sharply in 2Q, with services sector bearing the brunt of the downturn and expanded just 0.57%y/y in 1H20, a fraction of the 7.30% growth seen at end-2019. Manufacturing output fared relatively better, with 4.96%y/y gain in 1H20, vs. 11.29% at end-2019.”

“Given the sharply lower 2Q20 data and a weakened base in the first half, we are trimming our 2020 growth forecast to 3.5%, from 5.2% made earlier. The revised projection implies a rebound of economic growth pace of around 5.5-7.0% in second half of the year, which is still possible given that the country has emerged from lockdowns earlier than many of its neighbours and the dynamism of its economy.”