Vietnam’s manufacturing sector resilient: HSBC

HSBC attributed the resilience of Vietnam’s manufacturing sector to the country’s rising attractiveness as a manufacturing hub, which helped reel in record FDI in 2015 and should boost exports in 2016.

According to a report released on March 3, the bank said in February, the Nikkei Vietnam’s purchasing managers’ index (PMI) fell to 50.3 in from 51.5 in January but new export orders picked up, and employment remained firm.

In 2015, the manufacturing industry expanded 10.6 percent and contributed 1.6 percentage points to the 6.7 percent rise in Gross Domestic Production (GDP).

The bank expected production output will remain steady in 2016 and forecast a 10.7 percent pickup.

Encouragingly, after surging to a record high in 2015, foreign direct investment (FDI) continued to flow into the country in the first two months of 2016 with registered FDI reached 2.8 billion USD as of February, representing a 135 percent year-on-year increase.

Meanwhile, domestic demand will likely remain firm thanks to private spending, which has been supported by still-low rates. The bank expected GDP to rise 6.7 percent in 2016, unchanged from last year, and forecast growth to accelerate to 6.8 percent in 2017.

However, the bank also forecasted inflation will climb to 5.2 percent by year end, breaching the government’s target ceiling and the State Bank to switch to a tightening mode in the second half of this year.

The bank added the State Bank will likely use administrative tightening measures to cool lending, especially in the real estate sector.

VNA