Log in
Business

Vietnam c.bank likely to raise policy rate in H2/2019: UOB

The Vietnamese economy is expected to expand 6.7% in 2019, which is a "robust" rate, says UOB.

The State Bank of Vietnam (SBV) is expected to hike the policy rate from 6.25% to 6.5% during the second half of 2019 as it would be time for the bank to normalize monetary policy gradually to prevent overheating, Singapore-based UOB has said in a note.
 
The SBV's headquarters in central Hanoi. Photo: Minh Tuan
The SBV's headquarters in central Hanoi. Photo: Minh Tuan
“As the economy would be looking in good shape and well able to handle a return to higher interest rates, the SBV could start raising its policy rate at a slow pace to reduce financial stability risks including escalating prices of real estate and other financial assets.

Moreover, gradually reducing accommodative monetary policy could help dwindle inflationary pressure and keep headline inflation to remain stable in 2019,” the bank said in a note titled “Vietnam: Moving towards robust growth in 2019” released Thursday.

After growing 7.1% in 2018, the Vietnamese economy is expected to expand 6.7% in 2019, which is, UOB says, robust. High transport and energy infrastructure investments remain important growth drivers. Industrial production will be boosted by continued opening of new multinational enterprises in labor-intensive, export-oriented manufacturing and processing industries.

However, unfavorable weather conditions could undermine agricultural output and mining production, the bank noted.

UOB analysts pointed out the US-China trade dispute could also have a spill-over impact on Vietnam. The exports are likely to suffer if these two countries reduce their demand for imported goods such as steel, machine parts, telephones, mobile phones and parts, and intermediate electrical components.

A flood of cheap Chinese products may also affect local industries. Nonetheless, these can be mitigated if Chinese multinational firms relocate their manufacturing to Vietnam. Its geographical proximity to China, market access to ASEAN, favorable trade terms with the US, and young labor pool stand Vietnam in good stead.

Standard Chartered Bank on January 16 forecast Vietnam’s economy to grow at a steady 6.9% in 2019, supported by FDI-driven manufacturing and stronger domestic activity. While the World Bank in December 2018 forecast the growth to decelerate to 6.6% in 2019 and 6.5% in 2020.
Reactions:
Share:
Trending
Most Viewed
SSC launches Vietnam Governance Manual 2025

SSC launches Vietnam Governance Manual 2025

Vietnam targets 100% online processing of business-related procedures

Vietnam targets 100% online processing of business-related procedures

By 2026, corporate compliance costs must be halved compared to 2024, achieved through a 50% reduction in processing times.

Vietnam aims to create one million new businesses by 2030

Vietnam aims to create one million new businesses by 2030

Ministries and local governments are expected to cut at least 30% of processing times, compliance costs, and unnecessary business conditions this year.

Hanoi advances energy efficiency for businesses

Hanoi advances energy efficiency for businesses

Hanoi authorities, in collaboration with relevant agencies, are providing technical support to businesses in adopting advanced energy-saving technologies and developing energy efficiency indices.

Vietnamese spend US$13 million daily on coffee and tea

Vietnamese spend US$13 million daily on coffee and tea

Total revenue for the F&B industry is expected to reach VND755.4 trillion ($29.6 billion) this year.

Vietnam works to overcome US seafood export barriers

Vietnam works to overcome US seafood export barriers

Vietnam’s seafood industry is facing new trade barriers from the US under the Marine Mammal Protection Act (MMPA), which aims to reduce bycatch and promote sustainable fishing.

New IPO rules in Vietnam: How startups can raise capital faster?

New IPO rules in Vietnam: How startups can raise capital faster?

Unlocking capital flows would be crucial for the sustainable development of Vietnam's startup ecosystem.

Viettel to open new data center in Ho Chi Minh City next month

Viettel to open new data center in Ho Chi Minh City next month

Expected to be operational by 2026, the center will play a critical role in meeting the data storage and processing needs of southern Vietnam.