Vietnam's 2014 growth is expected to hit 5.6 percent and improve to 5.8 percent in 2015, according to the Global Economic Update 2015 released on December 3 by the Australia-New Zealand Banking Group (ANZ).

The growth is attributed to the country’s consistently softened inflation, improved reserves, increase in export and FDI intake into manufacturing industries and stable currency exchange rate, according to Warren Hogan, ANZ’s chief economist.

Meanwhile, ANZ chief Economist for South Asia, ASEAN & Pacific Glenn B.Maguire highlighted Vietnam’s GDP growth of 6.4 percent in quarter 3 as a surprise in the context of weak domestic demand, saying that external demand remains the main driver of growth when a strong FDI profile is seen in export manufacturing.

According to the report, as of October 20, there were 1,306 newly approved FDI projects, which brought in more than 9.95 billion USD in new committed capital. At the same time, 469 existing projects received additional funding worth 3.75 billion USD, taking total FDI to 13.7 billion USD.

The manufacturing sector has so far attracted almost 10 billion USD in new FDI as of October, accounting for around 70 percent of total new and additional FDI, mainly due to investments from the Republic of Korea, Singapore and Hong Kong.
FDI to the manufacturing sector in the semiconductor industry will likely maintain a key support to export-related production.

The report showed that Vietnam’s trade balance is poised to be higher than in 2013, with trade surplus in Jan-Nov period of 1.866 billion USD, much higher than the narrow surplus in the same period last year.

ANZ experts expressed their belief that Vietnam may record another trade surplus in 2014 with its government budget disbursements being slower than initially expected, which could push back expectations of support on imports growth.

Regarding monetary policy, the report said there is risk of further easing by the central bank inflation continues to ease and credit growth remains soft, adding that if inflation continues to head downwards, it would open up the room to cut rates and still maintain positive real rates.

The report forecast a positive growth of 3.9 percent for the global economy in 2015, from 3.4 percent in 2014; the United States’ figures are 3.2 percent and 2.3 percent; Eurozone, 1.3 percent and 0.8 percent, respectively, while China’s growth is forecast to reach 7.5 percent this year and drop to 7.0 percent in 2015.-VNA