HSBC predicts 5.5 pct growth for Vietnam economy

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Vietnam's economic growth will rise to 5.5 percent this year fueled by a surge in exports, especially by the foreign-invested sector, HSBC has forecast.

The number is 0.2 percentage points higher than the bank had forecast late last year.

Gross domestic product growth was only 4.9 percent in the first quarter, but HSBC expects higher growth this year than the 5.03 percent the economy managed last year.

In the first quarter the foreign-invested sector achieved a trade surplus of $3.12 billion as overall surplus stood at $481 million.

The state sector on the other hand reported a deficit of $2.6 billion.

The foreign sector is set to do even better as investors are pumping more money into Vietnam, HSBC said.

Since the start of this year investors have pledged $6 billion, a 63 percent jump from the same period last year, 90 percent of it in manufacturing and processing.

Increases in manufacturing output and export orders have been reflected in the manufacturing purchasing managers' index (PMI) released by the bank, which climbed to 50.8, the highest level in almost two years.

It was due to increasing demand in markets like China, Japan, and Thailand, HSBC said.

Apart from the foreign sector's performance, the bank said remittances and improving local demand would also contribute to increasing economic growth.

Despite the economic situation, overseas Vietnamese last year remitted a total of $10 billion. The country has seen a 10 percent growth in remittances every year since 2010.

HSBC said it is a good sign that first quarter inflation was 2.39 percent, lower than the 2.54 percent for the same period last year.

Prices are likely to rise by 6.7 percent this year, it said.

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