GDP growth in 2013 is projected at 5.5%.

HSBC forecasts that the economy will improve in 2013 and inflation will be kept at a lower level.

HSBC has just released its March 2013 Vietnam Macroeconomic Outlook report. According to the report, HSBC forecasts GDP growth of 5.5% in 2013, supported by gradually improving domestic demand, accelerating foreign investment, and stable remittances.

By the end of 2014, exports will grow, contributing approximately 90% to GDP growth.

While both imports and exports are growing, meaning the trade surplus will be insignificant, Vietnam is unlikely to return to a period of high trade deficits due to increasingly cautious consumer behavior.

For the first quarter of 2013, while both the official PMI and GDP figures showed a sequential decline, the HSBC PMI still indicated slight growth, while the statistical GDP figures showed a sharp decline at an even faster rate than in the first quarter of 2012. Because GDP figures, especially those for Vietnam, are often estimates that can be subsequently revised, these figures should be interpreted as a direction for the economy rather than absolute numbers. The slightly higher estimate of Q1 2013 GDP compared to the revised official figure of 4.75% for Q1 2012 suggests that the economy in 2013 is expected to perform better.

HSBC also noted that the GDP growth figure for Q1 2013 was calculated based on 2010 constant prices, while past GDP figures were based on 1994 constant prices. Using 2010 constant prices, the Q1 2012 GDP figure was also revised upward from 4.1% to 4.75% year-on-year.

Inflation slowed in March from 7% in February to 6.6% in March. The average inflation rate for the first quarter of 2013 was below 7%, a positive sign from the 16% inflation rate in the first quarter of 2012. The decrease in inflation was driven by a sharp 0.5% drop in food prices compared to the previous month, up from 2.3% in February.

While the government is committed to maintaining economic stability, with weak domestic demand and restrained commodity prices, we expect inflation to be contained in 2013. Unless commodity prices rise sharply or public service costs increase further, as was the case in the healthcare sector in Q3 2012, inflation will slow in Q3 2013, creating conditions for the State Bank of Vietnam to further reduce the open market operations (OMO) interest rate by 50 basis points at the end of Q2 2013.

According to Kinhtenongthon-HV