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UOB: 2020 GDP to taper slightly to 6.8%

Released at: 12:19, 04/01/2020

UOB: 2020 GDP to taper slightly to 6.8%

Photo: UOB Vietnam

Mr. Harry Loh, CEO of UOB Vietnam, tells VET about Vietnam's economic achievements in 2019 and outlook for 2020.

by Hong Nhung

Vietnam recorded a quite successful 2019, with stable economic growth and positive indicators in terms of GDP growth, inflation control, FDI attraction, and favorable trade turnover. With such growth momentum, what do you forecast for Vietnam’s economic scenario in 2020?

We remain positive about Vietnam’s economic outlook. It will continue to be one of ASEAN’s fastest-growing economies backed by its young consumer market, booming manufacturing industry, increasing FDI, and rising cross-border trade.

FDI incentive policies from the government are complemented by more than a dozen free trade agreements, including the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) which will reduce tariffs across much of Asia. For Vietnam, these policies and agreements will help reinforce the country’s position as an attractive investment destination.

With strong momentum likely to continue in the next one or two quarters, we are revising our full year 2019 growth forecast to 7 per cent (from our previous projection of 6.8 per cent), followed by a slight tapering to 6.8 per cent in 2020. This implies economic activity in the fourth quarter of 2019 rose 7.1 per cent year-on-year.

In the context of a gloomy picture in the global economy, what challenges and difficulties will Vietnam have to address in order to maintain its robust economic development in the year to come?

To retain its economic competitiveness and attractiveness as a base for global supply chains, Vietnam will have to address a few challenges. Investments in infrastructure, for example in ports and roads, will help businesses operate more efficiently and reduce the costs associated with transport delays.

With the growth and expansion of industry and more factories being set up, there is the threat of increased pollution. As such, the encouragement of environmentally-conscious companies and business models would help secure more sustainable growth in the economy.

There is also concern over rising land prices, including industrial and residential property, which may increase costs for businesses. Given Vietnam’s booming economy, a skilled workforce is needed to help it reach its potential and maintain growth. The need for talent, particularly in the technology field, will rise, as more firms, financial institutions, and financial technology (fintech) companies invest in and expand their operations in the country.

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