Vietnam: GDP forecasted to expand nearly 3% in 2020 – UOB

Head of Research at UOB Group Suan Teck Kin, CFA, reviewed the latest GDP figures for the Vietnamese economy.

Key Quotes

“Vietnam’s 3Q20 real economic growth rebounded to 2.62%y/y, compared to the revised 0.39% in 2Q20, as business activities recovered, at least partially, from earlier part of the year.”

“For the first 3 quarters of 2020, headline GDP rose 2.12%y/y YTD, with industrial sector contributing 1.12ppt, or more than half of the gain, while services sector rebuilt its momentum with a 0.55ppt contribution.”

“While the worst of the impact from COVID-19 pandemic looks to be over, it is still a long way before Vietnam’s economy could return to its full capacity. The rebound in both the manufacturing sector and domestic consumption remains weak so far and border closures have reduced tourist arrivals to a trickle.”

“Nevertheless, we still expect the recovery to extend further in 4Q20 but the pace is likely to be restrained against a backdrop of ongoing global COVID-19 pandemic. We are keeping our forecast for 4Q20 GDP growth at 4.0%y/y, as well as full year projections of 2.8% in 2020 and 7.1% in 2021. Uncertainty and potential downside risks ahead will leave room for the central bank to take on one more rate cut in 4Q20.”