The Asian Development Bank (ADB) maintained its forecast for Vietnam’s GDP growth at 6.8% in 2019 and 6.7% for 2020, making the country the fastest-growing economy in Southeast Asia in the period, according to the bank’s latest Asian Development Outlook (ADO) report.
Source: ADO.
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According to ADO, Vietnam’s growth in the first half of 2019 is estimated at 6.8% year-on-year despite agriculture being hobbled by a prolonged drought and African swine fever.
Growth in industry and especially manufacturing remained robust, though moderating from the first half of 2018. Sustaining growth was owing to strong inflows of foreign direct investment, up by 27% in the first five months of 2019 from a year earlier.
China overtook the South Korea and Singapore to become the largest overseas provider of newly registered capital. Meanwhile, the US remained the largest export market for Vietnam, with exports to the US growing by 28% in the first five months of 2019 over the same period of last year.
The outlook for Southeast Asia has been downgraded slightly to 4.8% in 2019 and 4.9% in 2020 due to the trade impasse and a slowdown in the electronics cycle. However, evidence of trade and production redirection is emerging, as some countries in the region recorded increases in foreign direct investment and exports, with Vietnam being a highlight of the region. Other economies also saw growth in exports to the US pick up, which helped to offset weaker growth in exports to China.
Overall, the ADB maintained growth forecasts for developing Asia at 5.7% in 2019 and 5.6% in 2020 - unchanged from its April forecast. These growth rates are slightly down from developing Asia’s 5.9% growth in 2018. Excluding the newly industrialized economies of Hong Kong (China); South Korea; Singapore; and Taiwan (China), the regional growth outlook has been revised down from 6.2% to 6.1% in 2019 and that rate is expected to be maintained in 2020.
“Even as the trade conflict continues, the region is set to maintain strong but moderating growth,” said ADB Chief Economist Yasuyuki Sawada. “However, until the world’s two largest economies reach agreement, uncertainty will continue to weigh on the regional outlook.”
