ANZ forecast Vietnam’s 2014 growth may hit 5.6% and see steady yet slow improvement to 5.8% in 2015.
Growth in the medium term is expected to stay below long-term average with both the IMF and ADB forecasting 5.5% growth in 2014, and the World Bank expecting growth a tad lower at 5.4%.
With inflation still on a downward path, price savvy consumers may be delaying purchases in anticipation of even lower prices, said ANZ.
According to the bank, the industrial production (IP) index is expanding slower than the expansion over the same period in 2013. However, the recovery in the Purchasing Managers’ Index (PMI) to 51.7 in September (Aug: 50.3) remains supportive of the manufacturing sector.
Credit growth will likely accelerate through Q4. Loan growth reached 7.26% as of end September, from 4.33% in the previous month. Despite the subsequent rise in rates, liquidity is still supportive of economic activity, ANZ predicted.
Regarding foreign direct investment (FDI), ANZ reported that as of September 20, there were 1,152 newly approved projects that brought in more than US$7.64 billion in registered pledged capital. Some 417 existing projects received additional funding worth US$3.54 billion, taking total FDI to US$11.18 billion. FDI into manufacturing is still taking the lion’s share, keeping the outlook on exports promising, the bank noted.