It maintained its inflation forecasts at 3.6 per cent in 2024, well below the State Bank of Vietnam’s target ceiling of 4.5 per cent. For 2025, it kept its inflation forecast at 3 per cent.

The report, titled ‘Asian Economics Quarterly—Comin’ for a landing’, said the country’s growth rose in the second quarter (Q2) this year by 6.9 per cent year on year (YoY).

The manufacturing sector has emerged strongly from last year’s problems. Purchasing managers' indices (PMIs) have registered five consecutive months of expansion, while industrial production has registered a bounce-back in activity for the textiles and footwear industry as well, a domestic media outlet reported citing the HSBC report.

However, the domestic sector is recovering at a slower pace than initially expected, with retail sales growth still below the pre-pandemic trend, HSBC noted. The government has implemented measures to back a wide range of domestic sectors that is expected to shore up confidence with time.

Environment tax cuts on fuel and value-added tax cuts for certain goods and services will last until year-end.

The bank showed its confidence that the potential upside risks can offset the temporary economic disruptions from Typhoon Yagi.

Price developments are turning more favourable in the second half this year, as unfavourable base effects from energy have faded. An expected US Federal Reserve easing cycle will also help to alleviate some exchange rate pressures.

Fibre2Fashion News Desk (DS)