Illustrative photo (Source: VNA)

Hanoi (VNA) – Vietnam ’s inflation is forecast to rebound to 4.9 percent in 2016 while the Gross Domestic Product (GDP) growth is forecast at 6.7 percent, according to the December report of the Hong Kong and Shanghai Banking Corporation (HSBC).

According to experts from HSBC, the State Bank may choose to tighten monetary policy next year and raise the interest rate by 0.5 percent in the third quarter of 20 16, taking the OMO rate to 5.5 percent.

The report also said i n 2016, the current account balance would slip into a deficit equivalent to 1.6 percent of GDP from an estimated 0.2 percent surplus in 2015 and a 5.1 percent surplus in 2014.

On the funding side, experts said robust FDI inflows will continue supporting Vietnam’s overall balance of payments; however, this may not be enough.

The strain on foreign exchange markets following the heightened volatility of the RMB in August added to pressures on the balance of payments.

According to balance of payment data from the IMF, Vietnam’s foreign exchange reserves declined by 6.7 billion USD in Q3 this year , falling to 30.3 billion USD as of the end of September, or an estimated 2.1 months of import cover.

The likely return of current account deficits in 2016 means that the balance of payments may remain under pressure in 2016 and into 2017.

Several days before, the World Bank also forecast a 6.6 percent GDP growth for Vietnam next year.-VNA