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Vietnam

Vietnam Economy Outlook

Vietnam’s economy has been the region’s outperformer in 2024, with full-year growth likely at 6.7% y/y. In 2025, we think Vietnam will continue to outperform its peers, growing by 6.5%. 

In the second release of the November baseline, we updated our tariff assumptions, but the impact on GDP, inflation, and interest rates was small.

We have revised down our global economic forecasts slightly from our snap post-election assessment. The broad picture is little changed, though: a Trump presidency should have a mild impact on topline macro variables, while the effects on individual sectors and financial markets will likely be larger.

Global supply chains have continued to expand, despite talk of deglobalization and nearshoring. US and Japan have started to de-couple from China, but other G7 countries grow more dependent on Chinese inputs. Several “hotspots” are emerging across Asia with multiple winning formulas.

Asian worker in factory, supply chain

Despite talk of deglobalisation, a quantitative analysis of intermediate goods show global supply chains have continued to expand in the last five years. Amid a volatile world economy, swiftly evolving supply chains are minting new winners and losers in global trade.

The miracle growth story has further to unfold

Vietnam’s GDP grew by an average rate of 7% annually in the past three decades, surpassing all its ASEAN regional peers. Although 2023 and 2024 are set to see Vietnam’s weakest growth outside of Covid years, we think the pain is short-term.

Three key idiosyncrasies in Asian trade and why they matter

Idiosyncrasies in recent Asian trade data suggest that country-specific factors are becoming more influential and causing some countries’ exports to buck cyclical trends. If that continues, the fortunes of regional exporters will diverge further in 2024, though we still think the overall export trend will be subdued.

This report presents an assessment of international wine and spirits’ contribution to the economies of Thailand and Vietnam.

Asia

Inflation in Asia over the past year has by and large been a story of external supply shocks, rather than excess demand. And with those external forces now easing, so too are we seeing inflationary pressures start to recede. We think inflation will drop much further over the first half of this year, giving policymakers the space to stop raising rates.

India

Bengaluru’s and Hyderabad’s economies will most likely continue to outperform their Asia Pacific
and Indian peers in terms of growth in 2023.

manufacturing

We earlier argued that Asia’s manufacturing activity has been impacted more by demand than by supply-side pressures, due to strict Covid-related policies. Supply constraints in Asia have been less acute than in the US and Europe, and we had forecast resilient industrial growth in 2022 and 2023 as regional demand recovers. But the global growth outlook has deteriorated since then. Following our recent downgrade to 2023 GDP growth forecasts for most Asian economies, we now expect weaker industrial growth in Asia. That said, there will be divergences across the region.

We believe 2023 is likely to be a difficult year for nearly all Asian economies. Growth should slow everywhere, except perhaps China and Thailand. The slowdown will likely be driven by a recession in the global economy but also due a shift global demand away from goods and towards services.

agri-food-sector-in-southeast-asia

A comprehensive analysis of the economic contribution the agri-food sector makes to Southeast Asia, through five key markets: Indonesia, Malaysia, the Philippines, Thailand and Vietnam. We explore the demand outlook for the sector and the challenges it faces in the current global economic context, and the longer term.

Shipping port in Thailand, Asia

Manufacturing hubs in South East Asia are set to benefit from firms hedging against ongoing US-China frictions, in our view, and ASEAN countries will continue to be attractive destinations for investment.

Asia currency
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Research Briefing | Sep 16, 2022

APAC central banks look to anchor expectations rather than follow Fed

Bank Indonesia finally raised its policy rate late last month, and a few weeks later Bank Negara followed with its third increase since May. The central banks of South Korea, India, and the Philippines have been increasing the policy rate for some time now. So, considering the economic conditions and the various challenges that central banks are currently facing, what is the likely outlook on interest rates?

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Research Briefing | Sep 16, 2022

APAC central banks look to anchor expectations rather than follow Fed

Bank Indonesia finally raised its policy rate late last month, and a few weeks later Bank Negara followed with its third increase since May. The central banks of South Korea, India, and the Philippines have been increasing the policy rate for some time now. So, considering the economic conditions and the various challenges that central banks are currently facing, what is the likely outlook on interest rates?

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Asia currency
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Research Briefing | Mar 14, 2022

APAC commodity currencies lead the way amid Russia-Ukraine war

Russia’s full-scale invasion of Ukraine was not priced in by markets and has led to spiralling commodity prices, higher risk premia, and strong demand for the USD. Asian foreign exchange (FX) markets have felt the combined impact of these developments.

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Research Briefing | Mar 14, 2022

APAC commodity currencies lead the way amid Russia-Ukraine war

Russia’s full-scale invasion of Ukraine was not priced in by markets and has led to spiralling commodity prices, higher risk premia, and strong demand for the USD. Asian foreign exchange (FX) markets have felt the combined impact of these developments.

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Ship waiting at harbor
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Research Briefing | Dec 9, 2021

Asia exports look to improve in 2022

Asia-exports-look-to-improve-in-2022_Page_1

The level of Asian exports in volume terms has been stagnant in H2 2021. In addition, across the major manufacturing exporting economies, there have been significant disparities in export performance. Our analysis finds these differences stem from compositional differences in export products and supply-side constraints.

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Research Briefing | Dec 9, 2021

Asia exports look to improve in 2022

Asia-exports-look-to-improve-in-2022_Page_1

The level of Asian exports in volume terms has been stagnant in H2 2021. In addition, across the major manufacturing exporting economies, there have been significant disparities in export performance. Our analysis finds these differences stem from compositional differences in export products and supply-side constraints.

Read more

Philippine currency
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Research Briefing | Dec 8, 2021

APAC’s regional monetary policies to continue to diverge in 2022

Ipad Frame (76)

We expect monetary policy to continue to diverge across Asia Pacific (APAC) in 2022, with central banks in the advanced APAC economies (apart from RBA and BoJ) further normalising monetary policy, leading the US Federal Reserve.

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Research Briefing | Dec 8, 2021

APAC’s regional monetary policies to continue to diverge in 2022

Ipad Frame (76)

We expect monetary policy to continue to diverge across Asia Pacific (APAC) in 2022, with central banks in the advanced APAC economies (apart from RBA and BoJ) further normalising monetary policy, leading the US Federal Reserve.

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supply chain
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Research Briefing | Dec 1, 2021

Asia supply-chain disruptions easing but challenges remain

Ipad Frame for APAC_Asiasupply-chaindisruptionseasingbutchallengesremain

Following an easing in restrictions, Asia production is ramping up to meet strong global demand for consumer goods, auto parts, and electronics. While capacity will remain tight, the efficiency Asia’s ports (including 24/7 operations) means there’s scope for production increases to be moved rapidly through logistics chains across the region. The upturn in production should help ease global supply-chain bottlenecks heading into 2022. But port logjams in the US and Europe mean delays will remain significant, and we expect global freight rates to remain high into H1 2022.

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Research Briefing | Dec 1, 2021

Asia supply-chain disruptions easing but challenges remain

Ipad Frame for APAC_Asiasupply-chaindisruptionseasingbutchallengesremain

Following an easing in restrictions, Asia production is ramping up to meet strong global demand for consumer goods, auto parts, and electronics. While capacity will remain tight, the efficiency Asia’s ports (including 24/7 operations) means there’s scope for production increases to be moved rapidly through logistics chains across the region. The upturn in production should help ease global supply-chain bottlenecks heading into 2022. But port logjams in the US and Europe mean delays will remain significant, and we expect global freight rates to remain high into H1 2022.

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Research Briefing | Nov 18, 2021

ASEAN growth tracker shows growth bottoming out

RB image for APAC_ASEAN_growth_tracker_shows_growth_bottoming

Real GDP for ASEAN-6 economies1 grew 1.7% y/y in Q3, down from 9.3% in Q2, reflecting both a less favourable base effect and a drop in growth momentum due to tightening restrictions. Our growth tracker was broadly in line with Q3 GDP for Indonesia, Singapore, and Thailand, while GDP undershot the tracker for the Philippines, and to a lesser extent for Malaysia and Vietnam.

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Research Briefing | Nov 18, 2021

ASEAN growth tracker shows growth bottoming out

RB image for APAC_ASEAN_growth_tracker_shows_growth_bottoming

Real GDP for ASEAN-6 economies1 grew 1.7% y/y in Q3, down from 9.3% in Q2, reflecting both a less favourable base effect and a drop in growth momentum due to tightening restrictions. Our growth tracker was broadly in line with Q3 GDP for Indonesia, Singapore, and Thailand, while GDP undershot the tracker for the Philippines, and to a lesser extent for Malaysia and Vietnam.

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