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Tag: GDP

  • IMF Raises Taiwan 2026 Growth Forecast to 10.7% on AI Demand

    IMF Raises Taiwan 2026 Growth Forecast to 10.7% on AI Demand

    The International Monetary Fund raised its 2026 gross domestic product growth forecast for Taiwan to 10.7 percent, up from 5.2 percent in April. Taiwan is now the only economy worldwide projected to record double-digit expansion this year. Sustained export demand for artificial intelligence hardware drove the revision.

    Published in the IMF World Economic Outlook report at its annual meetings in Bangkok, the updated figure puts Taiwan well ahead of regional peers. Singapore is projected to grow 5 percent, Hong Kong 3.8 percent, South Korea 3.3 percent, and Japan 0.7 percent. China is forecast to expand 4.5 percent, while the United States is pegged at 2.3 percent.

    Hardware Concentration Powers Trade Surplus

    Global demand for AI computing infrastructure has concentrated trade flows in a narrow set of manufacturing hubs. Upstream fabrication of advanced semiconductors remains limited to a few markets. Together, Taiwan and South Korea account for 62 percent of net global trade in AI-related computing hardware.

    Surging tech shipments have widened Taiwan’s external balance. The IMF projects the island’s current account surplus will reach 22 percent of gross domestic product in 2026. That ranks among the highest levels recorded by any major economy. Domestic consumer prices are forecast to rise 2 percent, up from the April estimate of 1.5 percent, while unemployment should hold steady at 3.4 percent.

    Regional Spillovers and Valuation Risks

    For supply chain operators and consumer goods businesses across East Asia, Taiwan’s hardware concentration creates diverging market dynamics. Capital is flowing into component suppliers and raw material exporters across East Asia, while consumer-facing sectors face higher imported costs. Concentration of capital expenditure in hardware fabrication also leaves the wider regional economy exposed to any correction in tech sector valuations.

    A sudden pullback in infrastructure spending by global cloud platforms would quickly compress hardware export orders across Taipei and Seoul. As IMF chief economist Silvana Tenreyro told journalists in Bangkok:

    The global economy has been resilient, but that resilience is under strain, with risks tilted to the downside.

    Divergence from Official Budget Office Projections

    Earlier in August, Taiwan’s Directorate-General of Budget, Accounting and Statistics projected 11.05 percent GDP growth for 2026. The multilateral lender kept its projection slightly below domestic estimates. It cited drag from global energy prices linked to Middle East conflict, alongside overall global growth slowing to 3.1 percent from 3.5 percent last year.

    Trade data scheduled for release at the end of the fourth quarter will indicate whether high-density server and semiconductor shipments maintain their current pace into early 2027.

  • China Third-Quarter Economic Growth Estimated at 4.4%

    China Third-Quarter Economic Growth Estimated at 4.4%

    China expanded by an estimated 4.4 per cent year on year in the third quarter, falling short of official targets despite sustained momentum across artificial intelligence.

    The July to September result edged up only marginally from the previous quarter, held back by protracted weakness in domestic consumption and real estate.

    Tech gains trail real estate losses

    Surging investment in artificial intelligence and related hardware provided a lift to industrial output during the quarter. Overseas shipments also held firm, providing critical support for factory floors across the mainland.

    Those industrial gains failed to counterbalance the wider property slump. Housing market contraction continues to depress household balance sheets, limiting the broader economic impact of high-tech manufacturing.

    Consumer spending holds back recovery

    Domestic retail demand remained subdued throughout the three-month period. Shoppers kept spending tight, muting turnover across merchant networks and consumer brands operating in tier-one and regional markets.

    Sluggish consumer spending poses direct challenges for retail operators, landlords and supply chain networks that rely on strong mainland foot traffic. Without sustained consumer demand, gains in factory output cannot flow into the service sector.

    Export strength faces domestic drag

    Strong export numbers kept trade balances positive through September, but external demand cannot carry the entire expansion. Domestic store operators and commercial landlords continue to absorb the impact of cautious household budgets.

    Manufacturers focused on artificial intelligence hardware and export goods outperformed domestic consumer suppliers by a wide margin. That divergence leaves consumer-facing businesses exposed to prolonged margin pressure.

    Pressure builds on growth targets

    The slight quarter-on-quarter uptick leaves the full-year economic trajectory under pressure. Earlier quarters delivered steady factory output, yet household consumption failed to accelerate alongside industrial capacity.

    Official full-year gross domestic product targets require stronger domestic demand in the final quarter. The focal point shifts to upcoming retail sales figures and property transaction volumes across major metropolitan markets.

  • Thai Protesters Slam Foreign Companies as GDP Growth Slows to 1.9%

    Thai Protesters Slam Foreign Companies as GDP Growth Slows to 1.9%

    Thai activist groups staged protests in Bangkok against Chinese, Israeli and other foreign businesses accused of bypassing local ownership caps through nominee structures as quarterly growth slowed to 1.9 per cent in the second quarter.

    The pushback targets foreign entities operating in protected commercial sectors without direct statutory permits, prompting authorities to consider widening an ongoing enforcement campaign against proxy shareholding arrangements.

    Scrutiny on nominee corporate structures

    Demonstrators gathered outside foreign diplomatic missions, including the Israeli embassy, in October 2026, citing widespread evasion of foreign business limits and labor regulations. Under current corporate rules, foreign ownership in designated services, retail and agricultural sectors remains capped unless granted specific board exemptions or bilateral treaty waivers. Activists argue that overseas operators increasingly rely on silent local shareholders to secure operating control while running competing storefronts and logistics networks.

    Thai regulatory agencies have responded by reviewing business registrations in tourism hubs, retail districts and agricultural centers. Investigators examine voting rights, dividend distributions and bank accounts to identify enterprises where domestic shareholders act merely as legal fronts for overseas capital.

    Commercial tension across local supply chains

    For international operators and regional suppliers, heightened scrutiny on corporate structures raises immediate compliance hurdles. Foreign retailers, distributors and franchise networks operating through joint ventures must prove authentic domestic capital participation or risk sudden operational halts and corporate deregistration. The risk sits directly with joint-venture operators that structured majority-local equity on paper while retaining sole operational and financial authority.

    Local merchant groups continue to press trade authorities for tighter enforcement, arguing that foreign-backed entities flood consumer channels with subsidized imports and operate unlicensed supply chains. This pressure complicates commercial expansion for regional businesses seeking market entry through fast-tracked partnership arrangements.

    Slowing domestic momentum and investment friction

    The regulatory tightening coincides with a broader deceleration across the domestic economy, where second-quarter economic expansion reached only 1.9 per cent due to higher energy expenses and soft tourism receipts. A shifting public mood tests the country’s historic reliance on foreign commercial investment to support private sector employment.

    Yet capital inflows into capital-intensive industries remain elevated. Total investment applications filed with authorities climbed 37 per cent during the January to June period, propelled by data centers and advanced manufacturing projects that operate under statutory promotional exemptions rather than local proxy setups.

    Enforcement reviews expand into commercial hubs

    Scrutiny follows earlier municipal sweeps against foreign-operated wholesale markets and agricultural supply firms that used local nominees to trade goods reserved for Thai nationals. Commercial enforcement teams have since expanded document audits across hospitality and retail districts in Bangkok, Chiang Mai and Phuket.

    Commercial registries and enforcement agencies are now set to audit registered corporate shareholding structures across high-risk service sectors, with initial compliance findings expected before year-end.

  • Australian Retail Spending Climbs 7% as Stronger Dollar Eases Import Costs

    Australian Retail Spending Climbs 7% as Stronger Dollar Eases Import Costs

    Australian retail spending grew 7.0 per cent year on year in July, driven by consecutive monthly gains across all major discretionary merchandise categories.

    Monthly household expenditure expanded 1.1 per cent in July, marking a third straight monthly advance and providing merchant relief ahead of fourth-quarter trade.

    Official Australian Bureau of Statistics data showed apparel and footwear leading the monthly lift with a 1.6 per cent increase, while recreation and culture gained 1.5 per cent. Discretionary spending climbed 7.8 per cent compared to July 2025, even as higher price points accounted for part of the top-line dollar expansion.

    Currency Relief on Sourced Inventory

    Landed costs across consumer electronics, toys, apparel and homewares have eased as the Australian dollar moved above 70 US cents in late September. That contrasts with an average exchange rate near 64 US cents throughout 2025, lowering procurement expenses on goods invoiced in US currency.

    For regional supply chains and Asia-based manufacturers supplying Australian retail networks, a stronger local currency alters order timing and pricing use. Importers that locked in inventory during early 2026 faced compressed margins, whereas buyers placing late-year purchase orders now capture direct landed savings.

    GDP Expansion and Capital Investment

    Broader economic output expanded by 0.4 per cent during the June quarter, bringing annual gross domestic product growth to 2.1 per cent. Across the full 2025-26 financial year, the economy grew 2.4 per cent, outpacing performance recorded across the prior two fiscal periods.

    Capital allocations also widened during the period. Private business investment reached 12.7 per cent of gross domestic product, the highest level recorded in a decade, underpinned by capital outlays in data centres, renewable power installations and commercial aircraft fleets.

    Labour Market Resilience and Household Buffers

    Consumer cash reserves showed slight replenishment as the household saving ratio ticked up to 6.5 per cent in the June quarter from 6.4 per cent. Total employment expanded by approximately 39,000 positions in August, while the national participation rate stood at 67.1 per cent.

    Unemployment rose to 4.6 per cent as additional jobseekers entered the market, a level Reserve Bank of Australia Governor Michele Bullock noted sits within a range capable of cooling lingering price pressures. Headline inflation tracked at 3.5 per cent in July, with the trimmed mean indicator registering at 3.6 per cent.

    Interest Rate Pressures Heading into Peak Season

    Monetary policy remains the primary headwind for merchant balance sheets and household debt servicing. The central bank entered its late September policy review with the cash rate target at 4.35 per cent, having already executed three rate hikes earlier in 2026.

    Department store operator Myer flagged persistent market uncertainty, with executive chair Olivia Wirth noting consumer behaviour is likely to stay volatile across the coming 12 months. Australia’s four largest domestic commercial banks forecast a 25 basis point cash rate increase to 4.60 per cent at the next monetary policy determination.

  • Bank of Korea Projected to Lift 2026 Economic Growth Estimate Past 3%

    Bank of Korea Projected to Lift 2026 Economic Growth Estimate Past 3%

    The Bank of Korea is expected to raise South Korea’s 2026 economic growth forecast above 3 per cent from 2.6 per cent.

    Surging semiconductor exports and recovering domestic consumption are driving private analyst projections as high as 3.4 per cent. Economic forecasters surveyed by Yonhap News Agency anticipate the central bank will adjust its outlook upward during its upcoming revision cycle, reflecting stronger factory output and higher state spending supported by rising tax receipts.

    Semiconductor Supercycle Drives Upward Revisions

    Nomura Securities posted the highest forecast among respondents at 3.4 per cent. Park Jeong-woo, an economist at Nomura, noted that exponential growth in artificial intelligence inference workloads continues to outpace chip production, suggesting supply constraints could extend beyond 2027.

    Korea Investment & Securities analyst Ahn Jae-kyun projected 3.2 per cent annual growth, pointing to a combination of heavy technology exports and a rebound in local consumer demand. Other respondents placed their 2026 projections between 3.1 per cent and 3.2 per cent. Projections for 2027 moderated, landing between 2.2 per cent and 2.8 per cent across the surveyed institutions.

    Some analysts urged caution regarding the duration of the current technology cycle. Joo Won, deputy director of economic research at Hyundai Research Institute, noted that chip exports dipped in August compared to the prior month, suggesting the export boom may reach its peak between late 2026 and early 2027.

    Surplus Records and Consumer Price Pressures

    South Korea’s current account surplus for the first six months of 2026 has already surpassed the 2025 full-year record of $191 billion. Economists expect the central bank to sharply increase its previous $250 billion annual surplus projection published in May.

    For consumer-facing businesses across the region, a stronger macroeconomic baseline in South Korea provides welcome support for retail footfall and high-ticket consumer electronics, though imported inflation limits purchasing power. Central banks across East Asia face similar cross-currents as artificial intelligence hardware spending lifts headline industrial figures while currency volatility keeps domestic borrowing costs elevated.

    Economists expect the Bank of Korea to hold its 2026 consumer price inflation projection at 2.7 per cent, with elevated oil prices and the won-dollar exchange rate serving as the main hurdles to earlier interest rate cuts.

  • Japan Households Brace for Further Price Hikes Amid Weak Consumer Spending

    Japan Households Brace for Further Price Hikes Amid Weak Consumer Spending

    Japanese households are expected to face increasing financial strain as companies across the nation plan to raise prices for goods and services. These hikes, set to begin this summer, are a direct response to persistently high crude oil prices and other rising operational costs. This development is likely to further dampen consumer spending and could impede economic growth.

    Inflationary Pressures Mount

    The impending price adjustments come at a challenging time for Japan’s economy. The gross domestic product (GDP) for April-June recorded a modest 0.3% quarter-on-quarter growth, translating to an annualised rate of 1.1% after price and seasonal adjustments. However, this growth was not fueled by domestic strength. Both private consumption and corporate capital investment declined during the period, highlighting a significant weakness in Japan’s internal demand. The economy’s expansion was primarily supported by external factors.

    Impact On Retail And Consumer Sectors

    The anticipated price increases are poised to directly affect the purchasing power of Japanese consumers. With households already managing existing cost pressures, new price hikes on essential goods and services will likely lead to a further tightening of budgets. This situation poses a challenge for retailers and consumer brands operating in Japan, as cautious consumers may reduce discretionary spending. Companies will need to strategize carefully to navigate this environment of rising costs and potentially constrained consumer demand.

  • HCMC Aims to Double Vietnam’s Average with $9,800 Per Capita Income in Ambitious 2026 Growth Plan

    HCMC Aims to Double Vietnam’s Average with $9,800 Per Capita Income in Ambitious 2026 Growth Plan

    Ho Chi Minh City (HCMC), Vietnam’s largest city, has outlined ambitious economic goals for the year ahead. The city plans to increase its per capita income by 12%, bringing it to $9,800, a figure that is twice the national average. This is a significant increase from last year’s per capita income in the city, which stood at $8,755, in comparison to the country’s overall average of $5,026.

    Economic Projections and Future Plans

    In terms of economic growth, HCMC is targeting a 10% increase in 2026, a substantial rise from the 8% growth reported last year. The chairman of the city, Nguyen Van Duoc, outlined the main drivers of this growth: manufacturing, consumption and exports. However, the city’s growth plans do not stop here.

    It is also looking to develop three additional areas. An international financial center is being planned, along with a seaport logistics system. Furthermore, the city aims to combine innovation with green and digital transformation for sustainable development.

    Addressing Infrastructure and Environmental Challenges

    Challenges that could potentially hinder the city’s economic growth have also been recognized. The issues identified include flooding, traffic congestion, and environmental pollution. These are referred to as the three “bottlenecks”, and the city has proposed several measures to overcome these problems.

    The city plans to upgrade its infrastructure, with projects such as the widening of National Highways 22 and 13 and Ring Road 4. There are also plans to construct the Can Gio and Thu Thiem bridges, as well as new metro lines. Chairman Duoc believes that if these projects are successfully implemented, they will significantly contribute to the city’s economic growth by surpassing public spending disbursement targets.

    However, this is not without its challenges. Last year, the disbursement was only 74% of the target, amounting to VND89 trillion ($3.39 billion). Despite this, the city remains optimistic about its ambitious economic targets and plans for development.

    Questions & Answers

    What does HCMC plan to increase its per capita income to?
    HCMC is planning to increase its per capita income by 12%, which will bring it to $9,800.

    What are the main drivers of economic growth for HCMC?
    The main drivers are manufacturing, consumption, and exports. However, the city also has plans to develop an international financial center, a seaport logistics system, and combine innovation with green and digital transformation.

    What challenges is HCMC planning to address to ensure its economic growth?
    HCMC plans to address the three “bottlenecks” that are currently holding back its growth. These are flooding, traffic congestion, and environmental pollution. The city plans to address these through various infrastructure projects.

  • Vietnam’s Economy Soars: Standard Chartered Forecasts 7.5% GDP Growth in 2025 Amid Robust Trade and FDI Inflow

    Vietnam’s Economy Soars: Standard Chartered Forecasts 7.5% GDP Growth in 2025 Amid Robust Trade and FDI Inflow

    Standard Chartered Bank has revised its economic growth forecast for Vietnam this year from an initial prediction of 6.1% to a more promising 7.5%. In its most recent macroeconomic report, Standard Chartered also adjusted its growth prospect for the country for 2026, from 6.2% to a promising 7.2%.

    Increasing Role in the Global Supply Chain

    A key factor highlighted by Standard Chartered Bank was Vietnam’s expanding role in the global supply chain. This elevation is largely fueled by the country’s robust trading performance and deepening integration into international commerce through various free trade agreements. In September, Vietnam’s exports reached a staggering US$42.7 billion, a 24.7% increase compared to the previous year. This impressive growth was spearheaded by key sectors such as electronics and computers (up 66.2%), telephones (17.5%), and machinery (11.6%).

    Simultaneously, imports saw a 24.9% increase to $39.8 billion, with electronics and computer supplies (up 43.6%) and machinery (up 33.6%) leading the charge. These numbers indicate a consistent expansion in production and industrial capacity in Vietnam.

    Resilient External Position and Economic Recovery

    Standard Chartered Bank highlighted Vietnam’s resilient external position, bolstered by solid trade and a stable foreign exchange outlook. After previously being depleted due to the strengthening of the U.S. dollar, it is anticipated that the country’s FX reserves will be rebuilt. This reflects an improved macroeconomic stability and a healthy trade performance.

    As another positive economic indicator, the growth of domestic credit has also sped up, suggesting a continued economic recovery without requiring policy rate cuts. Current credit growth surpasses 15% year on year, which indicates growing business confidence and a higher demand for finance. The bank also pointed out that lending growth continues to be robust, supported by favourable liquidity conditions and government initiatives to stimulate growth.

    Foreign Direct Investment as Key Growth Driver

    Foreign direct investment (FDI) remains a significant contributor to growth. In the first nine months of 2025, the amount of disbursed FDI increased by 8.5% year on year, amounting to $18.8 billion, while registered FDI surged by 15.2% to $28.5 billion.

    Looking ahead, Standard Chartered economists predict the refinancing rate to remain at 4.5% for the remainder of this year and 2026, with favourable conditions encouraging investment and expansion. Tim Leelahaphan, senior economist for Vietnam and Thailand at Standard Chartered, praised Vietnam’s resilience and adaptability, which have been demonstrated through its strong FDI inflows and robust export growth. These factors have reinforced its strategic role in the diversification of the global supply chain and suggest an optimistic outlook for continued economic expansion.

    The bank also maintained its forecast for the USD/VND exchange rate at VND26,300 for this year and VND26,750 for 2026, while lowering inflation projections to 3.4% for 2025 and 3.7% for next year. These updated figures were based on stronger-than-expected growth momentum and easing price pressures.

    Questions & Answers

    What is the revised economic growth forecast for Vietnam in 2026?
    Standard Chartered Bank has revised the economic growth forecast for Vietnam in 2026 from 6.2% to 7.2%.

    What factors have led to the growth of Vietnam’s role in the global supply chain?
    The growth of Vietnam’s role in the global supply chain is primarily due to its strong trading performance and its deepening integration into international commerce through several free trade agreements.

    How is the Foreign Direct Investment (FDI) contributing to Vietnam’s economy?
    FDI is a significant contributor to Vietnam’s economy. In the first nine months of 2025, discharged FDI increased by 8.5% year on year, reaching $18.8 billion whereas registered FDI surged by 15.2% to $28.5 billion. This robust FDI inflow is a testament to Vietnam’s resilience and adaptability, indicating a positive outlook for continued economic expansion.

  • UOB Upgrades Vietnam’s 2025 GDP Growth Forecast to an Optimistic 7.5%

    UOB Upgrades Vietnam’s 2025 GDP Growth Forecast to an Optimistic 7.5%

    Vietnam’s economy is on a remarkable upswing, with the latest data from UOB’s Global Economics & Markets Research unit indicating a booming GDP expansion of 7.52% in the first half of the year—the fastest growth for this period since 2011. This vibrant increase is largely driven by a notable 14% surge in exports, fueled further by a boost in market sentiment following U.S. President Donald Trump’s temporary reduction of reciprocal tariffs to a baseline rate of 10% for 90 days.

    Tariff Landscape and Future Projections

    The elimination of tariff uncertainties in the second half of the year has set the stage for Vietnamese exports, with specific rates now locked in ahead of the August deadline. Vietnam faces a 20% levy but remains hopeful; UOB forecasts a solid 10% growth in exports for 2025, building on last year’s impressive 14% growth.

    Manufacturing and Foreign Investments Flourish

    Additional indicators reflect Vietnam’s economic resilience. The Manufacturing Purchasing Managers’ Index (PMI) rebounded to 52.4 in July, emerging from three months of contraction. Meanwhile, industrial output surged by 9% year-on-year, indicating robust manufacturing activity amidst fluctuating global conditions.

    Foreign direct investment (FDI) has also shown signs of vitality, reaching $13.6 billion as of July, a rise from $12.6 billion the previous year. Analysts suggest that full-year inflows could exceed $20 billion, although this would still trail last year’s total of $25.4 billion.

    A Bold Infrastructure Investment Plan

    In a bid to solidify growth, Vietnam’s government announced an ambitious $48 billion infrastructure investment plan in mid-August, encompassing 250 projects. This plan prioritizes urban development and transport, with 129 projects financed at a cost of $18 billion, while the remaining 121 projects—valued at $30.5 billion—will attract financing from foreign entities.

    Glimmers of Optimism in Monetary Policy

    UOB maintains its outlook for 2026 at a consistent 7% growth rate, with the Vietnamese government aiming for a target GDP growth of 8.3-8.5% for the current year. UOB analysts suggest that the strong second-half outlook, coupled with ongoing pressures on the Vietnamese dong, will likely keep the central bank’s refinancing rate steady at 4.5%. If drastic weakening of business conditions occurs, a reduction to a pandemic-era low of 4% could be considered—though this scenario remains unlikely.

    On the currency front, the dong may find itself struggling to capitalize on a potential weakening of the U.S. dollar, likely to occur once the Federal Reserve begins to cut rates. Nevertheless, UOB forecasts that dollar exchange rates will ease gradually, projecting VND26,300 in the last quarter of this year, VND26,200 in the following quarter, and VND26,000 by the third quarter of 2026.

    Questions & Answers

    How is Vietnam’s GDP growth in the first half of this year compared to past years?
    Vietnam’s GDP grew by 7.52% in the first half of the year, marking the fastest expansion for that period since 2011.

    What are the key drivers behind this growth?
    The robust growth is primarily attributed to a significant 14% increase in exports, supported by positive market sentiment following tariff reductions announced by the U.S. government.

    What steps is the Vietnamese government taking to sustain economic growth?
    Vietnam unveiled a $48 billion infrastructure investment plan covering 250 projects, with a focus on urban development and transport, showing a strong commitment to enhancing economic foundations.

  • UOB Boosts Vietnam’s GDP Growth Outlook to an Impressive 6.9%

    UOB Boosts Vietnam’s GDP Growth Outlook to an Impressive 6.9%

    Vietnam’s economy is doing a celebratory dance. A report from UOB’s Global Economics & Market Research Unit reveals that in the second quarter of 2025, Vietnam’s real GDP soared by an impressive 7.96% year-on-year, well surpassing Bloomberg’s forecast of 6.85% and UOB’s own prediction of 6.1%. This uptick follows a revised growth figure of 7.05% from the first quarter, highlighting a vibrant and resilient economy.

    Throughout the first half of this year, Vietnam’s GDP achieved an astonishing growth of 7.52% year-on-year, marking the highest rate recorded since data collection began in 2011. This remarkable performance can largely be attributed to businesses ramping up export orders during a 90-day window when the U.S. temporarily suspended reciprocal tariffs, replacing them with a standard 10% tariff rate.

    In the first six months of 2025, Vietnam’s export turnover surged by 14.4% compared to the same period last year, reaching $219 billion, while imports rose by 17.9% to $212 billion. These figures are nearly equivalent to the full-year growth rate witnessed in 2024, creating a picture of a robust trading environment.

    However, it’s not all sunshine and rainbows. Vietnam’s Purchasing Managers’ Index (PMI) suggests that the manufacturing sector still faces hurdles, having recorded six readings below the crucial 50-point threshold over the last seven months. This indicates ongoing challenges, particularly stemming from a dip in new orders. Alarmingly, the most recent data from S&P Global shows that export orders in June dropped at the steepest rate since September 2021, mirroring the declines observed in May 2023.

    With recent positive shifts in trade talks with the U.S., experts at UOB are cautiously optimistic, suggesting that the worst may be behind Vietnam, although tariffs continue to pose a significant challenge. In response to the adjusted U.S. tariffs on Vietnamese goods, UOB has revised its export forecast. Rather than the previously anticipated 20% decline, they now expect exports to the U.S. to grow modestly by 5%. Meanwhile, exports to other markets are projected to rise by 10%, closely aligning with the 11.3% increase recorded last year.

    Overall, Vietnam’s exports are anticipated to climb by 8.5% in 2025 — a notable deceleration from the 14% growth recorded in 2024. Taking all of this into account, UOB’s Global Economics & Market Research Unit has adjusted its GDP growth forecast for 2025, now predicting a rise of 0.9 percentage points, projecting a growth of 6.9% compared to the earlier estimate of 6.0%.

    On the monetary policy front, UOB indicates that the strong economic performance may reduce the urgency for further policy easing. As such, the bank expects the State Bank of Vietnam to keep its current policy rates steady, maintaining the refinancing rate at 4.5%.

    Questions & Answers

    How does Vietnam’s GDP growth in the second quarter compare to past performance?
    Vietnam’s GDP growth of 7.96% in Q2 2025 is the highest growth since data collection began in 2011, significantly exceeding forecasts by both UOB and Bloomberg.

    What are the main factors driving Vietnam’s economic growth in 2025?
    The acceleration in export orders during a temporary suspension of reciprocal tariffs by the U.S. plays a critical role, alongside a robust increase in both exports and imports.

    What challenges does Vietnam’s manufacturing sector currently face?
    The manufacturing sector struggles with a declining Purchasing Managers’ Index (PMI) and a significant drop in new export orders, reflecting ongoing vulnerabilities in the industry.

  • World Bank Projects 5.8% GDP Growth for Vietnam by 2025

    World Bank Projects 5.8% GDP Growth for Vietnam by 2025

    Vietnam’s Economic Landscape: Navigating Global Trade Shifts and Strengthening Growth Prospects

    As a trade-dependent economy, Vietnam is significantly influenced by evolving global trade policies. Currently, the U.S. is Vietnam’s largest export market, constituting 30% of its total exports, while China accounts for 38% of its imports. However, uncertainties in the global landscape may pose challenges to consumer confidence and spending, as highlighted by the World Bank (WB).

    Trade Policy Uncertainty and Consumer Confidence

    The World Bank reported that the ongoing shifts in global trade could adversely impact Vietnam’s exports and overall economic growth. Given the country’s high exposure to the international market, any unexpected changes in trade policy could diminish demand, slowing private investments and foreign direct investment (FDI).

    Despite these challenges, consumer spending has not kept pace with GDP growth in recent years. The financial sector shows signs of heightened vulnerability, with the average loan-loss coverage ratio among 26 banks dropping to 83% from 150% in 2022. Although the government has room to bolster demand through fiscal measures, effective execution may be hindered by ongoing issues with public investment disbursement.

    Poverty Trends: A Mixed Bag of Progress

    On a more positive note, Vietnam’s poverty rate is experiencing a decline. The proportion of the population living on less than $3.65 per day is projected to fall from 3.8% in 2024 to 3.6% this year. Nonetheless, sluggish growth in the agriculture sector suggests that the poorest segments may see limited gains.

    Call for Strategic Policy Measures

    Experts advocate for focused policy measures that prioritize public investment, mitigate financial sector risks, and implement structural reforms. While monetary policy interventions are restricted, fiscal strategies can still drive growth, especially through investments aimed at addressing critical infrastructure gaps. Recent reforms, including updates to the Law on Credit Institutions, lay the groundwork for enhancing financial sector stability and resilience.

    Future Growth Outlook: Optimism Amidst Challenges

    Accelerating structural reforms is essential for improving regulatory environments in vital sectors like information technology, electricity, and transportation. Such initiatives will not only green the economy but also build human capital and enhance the business climate, ultimately sustaining long-term economic growth.

    The World Bank forecasts a positive medium-term growth outlook for Vietnam, projecting GDP growth to rebound to 6.1% in 2026 and climb to 6.4% in 2027. To unlock this potential, Vietnam must navigate a more stable international economic landscape while reinforcing domestic reforms aimed at boosting productivity, investing in human capital, and advancing environmental sustainability.

    In conclusion, as Vietnam looks ahead, the interplay of global economic conditions and domestic reform efforts will be critical in shaping the retail sector and consumer experiences in the coming years. The path forward is ripe with opportunities for brand expansion and adaptation to emerging consumer trends.

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  • Retail sales up 3.5% in first two months, thanks to government’s pro-growth measures

    Retail sales up 3.5% in first two months, thanks to government’s pro-growth measures

    China is gradually shrugging off the negative impact of the pandemic, as official data showed that retail sales in the first two months of 2023 expanded, following China’s optimization of its COVID-19 response.

    Chinese experts predicted that retail sales will continue to increase, given concrete government measures to boost consumption.

    Retail sales totaled 7.71 trillion yuan ($1.12 trillion) in January and February, a year-on-year increase of 3.5 percent, data from the National Bureau of Statistics (NBS) showed on Wednesday. Retail sales fell 1.8 percent in December.

    The catering industry experienced a rapid recovery, with annualized growth of 9.2 percent in the first two months, compared with a decrease of 14.1 percent in December.

    “The rebound of consumption was a major bright spot of China’s economic operations in the first two months of this year,” Fu Linghui, a spokesperson of the NBS, told a press conference in Beijing.

    The fast recovery came amid the rebuilding of consumers’ confidence, and on-site consumption has rebounded since China revamped its COVID-19 management in light of the evolving situation, Zhou Maohua, an economist at Everbright Bank, said told the Global Times on Wednesday.

    The retail, catering and travel sectors have seen a surge in demand, and the boost from China’s Spring Festival holidays also helped lift consumption, Zhou said.

    The NBS also released other statistics on Wednesday, such as the total value added of industrial enterprises above the designated size, fixed-asset investment and employment, which Fu said showed that “China’s overall economic performance is showing a trend toward stabilization and recovery.”

    China has set a GDP growth target of about 5 percent in 2023, with a CPI target of about 3 percent, according to this year’s Government Work Report, which was delivered at the first session of the 14th National People’s Congress.

    China will seek to expand domestic demand in 2023, prioritizing the recovery and expansion of consumption, according to the report.

    The key to economic growth is lifting domestic demand, as the external environment remains uncertain and volatile, Fu said. Support measures have been rolled out nationwide, such as consumption promotions and vouchers for vehicle purchases.

    Vehicles occupy an important position in China’s consumption, accounting for approximately 10 percent of retail sales, according to a report released by Fitch Bohua on Wednesday.

    Some carmakers have launched subsidies this month to improve sales, and Fitch Bohua believes that automobiles will remain the primary big-ticket spending item this year, with more preferential policies to come. Promoting consumption is high on the government’s agenda this year, as the annual Central Economic Work Conference held in mid-December noted that the country would prioritize the recovery and expansion of consumption.

    A State Council executive meeting held in late January also urged prompt measures to promote an early recovery of domestic consumption to revive the economy. Boosted by this positive outlook, local governments have been moving to unveil an array of pro-consumption measures designed to fuel the growth of specific spheres.

    Cities such as Beijing, Shanghai and Zhengzhou, Central China’s Henan Province, have announced detailed plans to offer consumption coupons, which will nurture sales of vehicles and home appliances, experts said.

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  • World Bank lowers Vietnam growth forecast to 5.3 pct

    World Bank lowers Vietnam growth forecast to 5.3 pct

    The World Bank has cut its growth forecast for Vietnam this year to 5.3 percent, due to surging Covid-19 infection in Q1 and economic slowdown in its major export markets.

    This has been the second time the bank lowers its 2022 projection for the country. Last October it had expected a growth rate of 6.5 percent, lowered to 5.5 percent in January.

    Vietnam’s GDP is expected to grow by 5.3 percent this year and stabilize at around 6.5 percent in a scenario with eased mobility restrictions domestically and internationally, it added to a report released Tuesday.

    It forecasts the service sector to gradually recover during the year as consumer confidence is restored and tourism resumes from mid-2022 onward.

    But manufacturing will grow at a slower pace mirroring moderating growth in Vietnam’s main export markets of the U.S., the European Union and China.

    But it warned of the outlook of heightened risks from external economic shock, including the Russia-Ukraine conflict and new Covid-19 variants, slowing recovery of domestic demand, and labor shortage due to a surge in infections.

    “Additional shocks could lead to a low case scenario where GDP grows 4 percent in 2022, recovering to 6 percent and 6.5 percent in 2023 and 2024, respectively”.

    The World Bank recommended the Vietnamese government to deploy a strong fiscal policy support, and accommodative and prudent monetary policy.

    It was also cautious about economic and human capital consequences of inequality, which was driven up by the pandemic and lockdowns between last May and September.

    Vietnam’s economy grew by 2.6 percent last year, well below its pre-pandemic trend of 7 percent.

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  • Malaysia’s economy likely to slow in April to June 2019

    Malaysia’s economy likely to slow in April to June 2019

    Malaysia’s economy is likely to grow at a slow rate in April to June 2019 in view of the decline in the Leading Index (LI) in December 2018, according to the Statistics Department. Chief statistician Datuk Seri Dr Mohd Uzir Mahidin said the monthly change of LI decreased 1.4% to 117.3 points in December 2018 from 119.0 points in the previous month.

    “The declined in six out of seven components have weighed down the performance of the LI with the significant decreased by two components namely real imports of other basic precious & other non-ferrous metals and number of housing units approved, which posted negative 0.5% respectively,” he said in a statement.

    The annual change of LI also registered a negative growth of 1.7% in December 2018.

    The LI is designed to monitor the economic performance for an average of four to six months ahead.

    Meanwhile, the Coincident Index (CI), a measure of current economic activity, was unchanged in December 2018.

    The increased in real salaries & wages in manufacturing sector (0.2%) and real contributions to EPF (0.1%) were offset by the decreased in capacity utilisation in manufacturing sector (-0.2%) and Industrial Production Index (-0.1%).

    The annual change of CI grew at 3.6% as in the previous month.

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  • Malaysia’s economy expands 4.7% in Q4 2018

    Malaysia’s economy expands 4.7% in Q4 2018

    The Malaysian economy grew at a faster pace of 4.7% in the fourth quarter (Q4) of 2018 driven by private sector activity. This compares with a 4.4% growth in Q3 2018. For 2018 as a whole, the local economy also expanded 4.7%. According to Bank Negara Malaysia (BNM), a rebound in exports of goods and services contributed towards the positive growth of net exports.

    Headline inflation declined to 0.3% from 0.5% in Q3, mainly due to transport inflation turning negative.

    The zerorisation of the Goods and Services Tax and the implementation of the Sales and Services Tax continued to exert an overall downward impact to headline inflation during the quarter.

    BNM governor Datuk Nor Shamsiah Mohd Yunus said the Malaysian economy is expected to remain on a steady growth path with private sector demand being the main driver of growth.

    She said headline inflation is expected to average moderately higher.