Vietnam's long-term FDI prospects seem to be intact: HSBC report

FDI inflows to the country has no doubt fallen from its 2017 peak, partly due to tighter global monetary conditions, the report, titled ‘Vietnam at a Glance’ noted.

Its manufacturing sector, which accounts for the bulk of FDI, offers hope that the country can climb up the value chain, paving the way for a robust rebound when the trade tide eventually turns, it said.

Fresh FDI continues to pour into the manufacturing sector, with the figure so far this year exceeding the total recorded in each of the past three years.

During President Joe Biden’s visit to Vietnam in September, he announced that US technology companies plan to invest in the country.

The country’s economy recovered at a stronger-than-expected pace of 5.3 per cent in the third quarter this year after a challenging first half of the year.

This was largely because of some reprieve in the trade sector, with September marking the first month of annual growth in exports, the HSBC report noted. Export weakness remains largely broad-based, a Vietnamese media outlet reported.

In particular, China’s surging demand for agricultural products has put a floor under Vietnamese exports, although it is unable to reverse the still-sluggish demand from the United States and the European Union (EU), it said.

While exports to the United States, with a 30 per cent share of the total, and to the EU, with a 15 per cent share, are yet to see a turnaround, they have halted further deterioration. In contrast, exports to China, with a 15 per cent share, saw sequential double-digit growth.

HSBC economists have forecast a 5-per cent annual growth for Vietnam this year.

Fibre2Fashion News Desk (DS)