Vietnam’s Electronics Industry Continues to Thrive Thanks to Global Recovery and Foreign Direct Investment

Vietnam’s electronics industry is set to experience strong growth in the second half of the year, thanks to the recovery of the global electronics cycle and continued positive foreign direct investment (FDI), according to HSBC. The latest purchasing managers index (PMI) shows expanding production, with electronics exports performing especially well.

Vietnam’s attractiveness as an investment destination remains stable, with an increase in FDI projects and capital in the past 5 months. This is partly due to Vietnam being a top choice in Southeast Asia for the “China + 1” strategy, leading to the production of various goods such as MacBooks, iPads, and Apple Watches in the country.

In addition to its competitive labor costs, access to markets through numerous free trade agreements, and proximity to China, Vietnam’s favorable location makes it a favored destination for supply chains. Despite this positive outlook, inflation remains a concern, approaching the State Bank’s ceiling of 4.5%.

HSBC has raised its GDP growth forecast for the last two quarters of the year to 6.2% each quarter and expects Vietnam’s economy to expand by 6% for the whole of 2024. However, factors such as inflation and currency volatility due to USD strengthening in the short term may warrant caution from the State Bank in its interest rate policy.