The Economist Intelligence Unit (EIU) of The Economist Group has confirmed Vietnam ’s improving economic prospects, saying after several years of lacklustre economic performance, headline indicators suggest that Vietnam may be turning a corner.
According to the agency, investment in export-oriented manufacturing indicates renewed confidence, HSBC's Purchasing Managers' Index, a snapshot of manufacturing conditions, hit 51.5 in September - the best reading since the survey-based data started being collected in 2011.
Although macroeconomic uncertainty persists, Vietnam's competitiveness provides fuel for cautious optimism about an uptick in growth in 2014 from increased inward investment and higher export earnings , it said.
The EIU said that t he ruling Communist Party of Vietnam knows that political stability and, more importantly, the government's perceived legitimacy depend on furnishing a growing and young population with jobs and rising living standards.
One of the first measures the Vietnamese Government has taken is to impose across-the-board increases in minimum wages in early 2013 and further rises in the following year , despite the government's commitment to containing inflation.
For the moment, growth of the so-called "foreign invested" sector in Vietnam continues to tip the balance in favour of job creation. F oreign investment has increasingly flowed into the electronics-assembly sector, where inputs such as circuit boards and lenses are matched with Vietnamese labour to produce high-value electronic goods.
These investments have included multi-million dollar projects by companies including Panasonic, JBL, Fuji Xerox and Nokia. Samsung of the Republic of Korea , in particular, plans to increase its manufacturing investments in Bac Ninh province to 2.5 billion USD and to break ground on a new 2 billion USD factory complex in Thai Nguyen province.
Meanwhile, some retailers are betting on growth in local buying power. Auchan, a French retailer that closed up shop in Vietnam five years ago, now has plans to return in 2014 with investments totaling around 500 million USD over the next ten years.
According to the EIU, Vietnam's increasing popularity as a destination for export-oriented investors, reflects regional leadership in other important respects, including the transport infrastructure necessary to get inputs in and finished goods out. The country also has an extensive electricity grid that reaches more than 90 percent of populated areas.
Accelerating investment in higher value-added sectors suggests that Vietnam's increasingly sophisticated export basket can sustain rising wages. Looking ahead, the Trans-Pacific Partnership, a trade deal involving the US and several other countries, is expected to privilege Vietnam-based exporters with greater access to lucrative high-income markets.
Vietnam ’s GDP growth is estimated at around 5.3 percent this year, and the National Assembly, Vietnam 's legislature, has endorsed an optimistic 5.8 percent target for 2014.
Despite continued uncertainty about the downside risks still posed by bad debts in the banking sector, a combination of increased manufacturing activity, higher export receipts, and strong positive signals from foreign investors is pushing growth expectations upwards.-VNA
According to the agency, investment in export-oriented manufacturing indicates renewed confidence, HSBC's Purchasing Managers' Index, a snapshot of manufacturing conditions, hit 51.5 in September - the best reading since the survey-based data started being collected in 2011.
Although macroeconomic uncertainty persists, Vietnam's competitiveness provides fuel for cautious optimism about an uptick in growth in 2014 from increased inward investment and higher export earnings , it said.
The EIU said that t he ruling Communist Party of Vietnam knows that political stability and, more importantly, the government's perceived legitimacy depend on furnishing a growing and young population with jobs and rising living standards.
One of the first measures the Vietnamese Government has taken is to impose across-the-board increases in minimum wages in early 2013 and further rises in the following year , despite the government's commitment to containing inflation.
For the moment, growth of the so-called "foreign invested" sector in Vietnam continues to tip the balance in favour of job creation. F oreign investment has increasingly flowed into the electronics-assembly sector, where inputs such as circuit boards and lenses are matched with Vietnamese labour to produce high-value electronic goods.
These investments have included multi-million dollar projects by companies including Panasonic, JBL, Fuji Xerox and Nokia. Samsung of the Republic of Korea , in particular, plans to increase its manufacturing investments in Bac Ninh province to 2.5 billion USD and to break ground on a new 2 billion USD factory complex in Thai Nguyen province.
Meanwhile, some retailers are betting on growth in local buying power. Auchan, a French retailer that closed up shop in Vietnam five years ago, now has plans to return in 2014 with investments totaling around 500 million USD over the next ten years.
According to the EIU, Vietnam's increasing popularity as a destination for export-oriented investors, reflects regional leadership in other important respects, including the transport infrastructure necessary to get inputs in and finished goods out. The country also has an extensive electricity grid that reaches more than 90 percent of populated areas.
Accelerating investment in higher value-added sectors suggests that Vietnam's increasingly sophisticated export basket can sustain rising wages. Looking ahead, the Trans-Pacific Partnership, a trade deal involving the US and several other countries, is expected to privilege Vietnam-based exporters with greater access to lucrative high-income markets.
Vietnam ’s GDP growth is estimated at around 5.3 percent this year, and the National Assembly, Vietnam 's legislature, has endorsed an optimistic 5.8 percent target for 2014.
Despite continued uncertainty about the downside risks still posed by bad debts in the banking sector, a combination of increased manufacturing activity, higher export receipts, and strong positive signals from foreign investors is pushing growth expectations upwards.-VNA
