Vietnam's economy shows convincing new growth signals, with the Gross Domestic Product (GDP) increase in the second quarter of 2024 far exceeding expectations.

The report “Vietnam at a glance - Regaining the glory” recently released by the global research department of HSBC bank emphasized that for a long time, the Vietnamese economy has not had a strong boost, but that expected moment has finally come.

Vietnam's GDP growth in the second quarter of 2024 jumped to 6.93% year-on-year, almost the highest level in the past 2 years, far exceeding HSBC's and the market's expectations of 6%.

Adding a slight upward adjustment to growth in the first quarter of 2024, Vietnam's growth in the first 6 months of the year increased by 6.42% over the same period last year.

HSBC Bank has raised its forecast for Vietnam's full-year GDP in 2024 to 6.5% from the previous 6%, and assessed that Vietnam is likely to become the fastest growing economy in ASEAN in 2024.

According to HSBC, in the second quarter of 2024, both manufacturing and exports grew strongly compared to the previous year. However, the trade sector witnessed an uneven recovery, mainly led by a recovery in the electronics sector.

While this trend continues, other industries besides electronics are also starting to show signs of recovery.

Specifically, textile and footwear exports, which were previously affected, have also recovered and witnessed double-digit growth.

While trade has begun to recover, the long-term outlook for foreign direct investment (FDI) remains bright, according to HSBC. Although down from its 2017 peak, new FDI continues to flow into Vietnam.

Most of the capital is directed towards manufacturing, however, the real estate sector is also emerging with strong growth compared to last year's decline.

Besides investment from China and South Korea, investment from countries in the Association of Southeast Asian Nations (ASEAN) is also quite active, especially from Singapore. In fact, Singapore is the top country providing the most FDI to Vietnam.

For example, CapitaLand is planning to invest $110 million in Vietnam to help support the shift in manufacturing supply chains.

An important development that investors are interested in is that the Ministry of Planning and Investment is proposing to draft a Government Decree on the establishment, management and use of the Investment Support Fund.

HSBC stressed that Vietnam is still on track to see brighter growth prospects in 2024, if the recovery trend continues to spread.