2026-01-19 12:01

Key takeaways Gold broke above USD4,600 per ounce, driven by geopolitical risks and Fed independence concerns. FOMO inflows may reverse, increasing volatility, but central bank buying and “safe haven” demand could sustain gold rally… …at least until geopolitical risks ease or Fed easing expectations fade. Gold rallied to new highs recently on elevated geopolitical risks (Chart 1), notably developments in Iran and Venezuela. Any escalation could further support gold prices, while a reduction in geopolitical tensions may exert downward pressure. Concerns regarding the Federal Reserve’s (Fed) independence have also lent further support to gold and weighed on the USD. While a softer USD provides a foundation for gold prices, it is unlikely to drive significant further gains. In addition, rising fiscal deficits in the US and other countries are also boosting gold demand and may become increasingly influential. According to the International Monetary Fund’s (IMF) biannual Fiscal Monitor report (15 October), global government debt is projected to reach 100% of GDP by 2029 − the highest level since the post-World War II period. Global trade frictions continue to provide some support for gold, although this theme is less pronounced than in 2025. On balance, robust central bank purchases and sustained “safe haven” demand − set against a backdrop of ongoing geopolitical and economic risks and a softer USD − are likely to keep gold trading at historically elevated levels. Note: Geopolitical Risk Index (GRI) is compiled by Fed economists Dario Caldara and Matteo Iacoviello. Source: Bloomberg, HSBC Source: Bloomberg, HSBC Our precious metals analyst cautions that inflows driven by “fear of missing out”’ (FOMO) may push gold prices higher over the near term, but these could reverse rapidly at new highs, resulting in greater volatility and a broad trading range. Should geopolitical risks diminish or expectations for Fed easing not materialise (Chart 2), a correction could be intensified by increased supply from mining and recycling, alongside weaker physical demand. https://www.hsbc.com.my/wealth/insights/fx-insights/fx-viewpoint/gold-hit-usd-4600-oz/

2026-01-14 12:02

Key takeaways US action in Venezuela is inevitably raising questions about the new world order… …but the still buoyant markets will be steered by the macro picture and policy outcomes. We recently raised our global GDP forecasts to 2.8% in 2025 and 2.7% in 2026. While 2025 ended with trade uncertainty abating and some optimism that major conflicts in the world may be moving a little closer to some kind of resolution, US action in Venezuela could once again upend the world order. The implications will only become clear in time, so with global growth still seemingly resilient and global inflation still mostly trending lower, financial market optimism has not faded. Muddling through Uncertainty is here to stay though. The global economy in 2025 performed better than most had expected. Despite tariffs, global trade growth was strong, consumer spending held up. The gradual decline in inflation mostly continued. We still expect the global economy to muddle through in 2026, albeit supported globally by fiscal spending and the rollout of AI infrastructure. AI continues to drive multiple K-shaped expansions. In the US, higher-income households (particularly baby boomers) are driving consumer spending, partly on the back of wealth effects from AI equity holdings. The US is also at the forefront of the surge in AI-related investment. This is benefitting Asian exporters that are most exposed to AI-related electronics production – Taiwan, Korea, and much of ASEAN – and related areas of the AI ecosystem. Such rapid growth in world trade is unlikely to be repeated in 2026, given tariffs and such a high base for Asian exports, but we still expect expansion. Source: Macrobond Note: CPI held constant in October due to missing data. Source: Macrobond Volatile US data Although there is now a raft of US data that have become available with the end of the government shutdown, they are still hard to interpret. Payroll softness may have been driven by deferred government job losses, and, while private payrolls are steady, Federal Reserve (Fed) Chair Powell has stated that they could be an overestimate. And with immigration slowing and productivity rising, the unemployment rate edged back down to 4.4% in December. Also, US inflation has come down, but technical quirks are playing a role and globally input prices, particularly memory chips, are clearly on the rise. Moreover, government opening effects and tax cuts should support US growth in 1H26. Fiscal support Outside the US, Europe is showing early signs of recovery (Chart 3), though in 2026 much hinges on the execution of the fiscal support. Asia’s macroeconomic fundamentals have improved, but the recovery in mainland China has underwhelmed, and further policy stimulus will likely be needed to provide a boost (Chart 4). Monetary policy divergence is expected to be a prominent theme this year. We expect Australia, New Zealand, and Sweden to join Japan in raising rates, while the European Central Bank and the Fed stay on hold. In contrast, we see the Bank of England delivering another 75bp of cuts and some emerging market central banks, especially in Asia, continuing to ease. Source: Macrobond Source: Macrobond Our GDP forecasts Our global GDP estimate for 2025 now stands at 2.8%, higher than the 2.7% at the start of the year. We also recently raised our 2026 forecast from 2.5% to 2.7%, much of this is driven by a US upgrade reflecting payback after the government re-opening. That being said we are mindful that another possible US government shutdown could occur at the end of January, which could be a potential source of volatility. Another notable upgrade is in Japan, reflecting the recently approved fiscal stimulus. Note: *India data is calendar year forecast here for comparability. Previous forecasts are shown in parenthesis and are from the Macro Monthly dated 6 October 2025. Green indicates an upward revision, red indicates a downward revision. Source: Bloomberg, HSBC Economics ⬆ Positive surprise – actual is higher than consensus, ⬇ Negative surprise – actual is lower than consensus, ➡ Actual is in line with consensus Source: Bloomberg, HSBC Source: LSEG Eikon, HSBC https://www.hsbc.com.my/wealth/insights/market-outlook/macro-monthly/the-global-economy-in-2026/

2026-01-12 12:01

Key takeaways The USD was the worst performing G10 currency last year and is likely to stay soft in 2026. A significantly stronger USD would require unexpected Fed rate hikes, while other central banks hold or cut rates. The AUD, NZD, and potentially SEK are well positioned, but changes in risk sentiment remain a concern. In 2025, the USD was the worst performing G10 currency, with the US Dollar Index (DXY) falling c9.4% − its largest annual decline since 2018 (Chart 1). As we look towards 2026, the outlook for the USD remains subdued, provided that global economic growth holds steady, the Federal Reserve (Fed) does not raise rates, and US financial conditions stay accommodative. A key variable for the USD’s trajectory is the Fed’s monetary policy. Current market pricing anticipates c56bp of Fed easing by end-2026 (Bloomberg, 8 January). Should expectations for Fed rate cuts be removed, this could offer some support to the USD. However, this alone is unlikely to drive a sustained recovery, especially if other major central banks are expected to raise rates. For the USD to regain significant strength, the Fed would need to begin a rate-hiking cycle much earlier than currently anticipated, at a time when markets are not expecting further tightening from other central banks − a scenario we view as a high hurdle for 2026. That being said, a further significant weakening of the USD also appears unlikely once the Fed’s rate-cutting cycle concludes. Source: Bloomberg, HSBC Source: HSBC Applying our ‘Hierarchy of Needs’ framework to the G10 currency complex (Chart 2), several currencies are notable. The AUD, NZD, and potentially SEK are well positioned, benefiting from improved fiscal outlooks, recovering domestic growth, and the prospect of tighter monetary policy. These factors collectively enhance their relative attractiveness. However, it is important to note that risk sentiment is likely to remain a key driver; in a “risk-off” environment, these currencies could come under pressure. In contrast, the USD, EUR, GBP, and JPY currently lack the same combination of supportive factors. https://www.hsbc.com.my/wealth/insights/fx-insights/fx-viewpoint/the-broad-usd-to-stay-soft/

2026-01-09 08:04

Key takeaways While we remain optimistic about 2026, supported by strong AI adoption and a favourable earnings outlook, the recent geopolitical tensions in Venezuela highlight the continued importance of managing market volatility through multi-asset strategies. Beyond the US and Technology, we are diversifying by broadening our exposure across Asia and other sectors, by investing in gold and diversifying our currency exposure. We remain overweight on US equities, including IT and Communications, while diversifying into Industrials, Utilities and Financials to capture a broadening range of opportunities. Although we do not expect further Fed rate cuts, bonds are important for income generation in portfolios. We prefer US investment grade credit with medium duration. China’s Central Economic Work Conference (CEWC) 2025 reaffirmed policy priorities centred on innovation-driven structural growth, industrial upgrading and a revival in domestic demand through consumption and investment. With a significant EPS growth projection for 2026 (12.5%) and undemanding valuations at 12.3x forward P/E with a ROE of 11.2%, we remain positive on Chinese equities. Our investment approach balances exposure to AI themes and innovation leaders, with high-dividend, quality companies that benefit from both cyclical drivers and structural policy tailwinds. https://www.hsbc.com.my/wealth/insights/asset-class-views/investment-monthly/a-bullish-outlook-still-requires-strategic-diversification/

2026-01-08 12:01

Key takeaways UK household and business sentiment ticked higher but not enough to change the fortunes of weak economic data for 2025. Slower inflation and an interest rate cut should support a further improvement in activity to start the new year. ... but the 2026 outlook is fragile, with risks aplenty. An ‘it could have been worse’ sentiment lift The UK spent much of the second half of 2025 worrying about possible tax rises in the Budget. Now, with worst-case scenarios largely avoided, and the Autumn Budget in the rear-view mirror, hopes turn to an improvement in sentiment and a pickup in economic growth. Early indicators for December showed a mildly more positive environment, consumer confidence rose to -17, up two points from November, but it wasn’t enough to break out of its recent tight range. Similarly, the 0.6pt rise in the PMI business confidence in future trading expectations was modest given the degree of Budget-related uncertainty. More broadly, the economy has deteriorated: GDP growth was a meagre 0.1% q-o-q in Q3, real disposable income fell 0.8% q-o-q, the rate of unemployment rose to 5.1% in three months to October, and retail sales fell 0.1% m-o-m in November, suggesting a quieter-than-usual Black Friday. So, the small lift in sentiment in December is unlikely to translate into significantly better official data for that month or Q4 and reflects more of an ‘it could have been worse’ boost to sentiment. Source: HSBC Out with 2025, in with a new year We remain relatively optimistic that Q1 2026 will prove better than the prior quarter. Indeed, there was some positivity that could provide a sound platform: the UK inflation rate fell to 3.2% and the Chancellor’s Budget announcements should help see some sub-2% inflation rates in the middle of 2026. That improved inflation outlook coupled with the soft backdrop described above, helped see UK Bank Rate being cut to 3.75% at the Bank of England’s (BoE) December policy meeting. In our view, interest rates will gradually fall further in 2026, which should enable a pickup in consumer spending and some more investment. That said, our central case for 2026 is a fragile one, households remain cautious, real disposable income growth is meagre, and labour markets are soft. Unemployment could rise further amid subdued demand and further headwinds for businesses including labour costs and higher taxes. And although wage growth is slowing, a further above-inflation rise in the National Living Wage (NLW) in April combined with pockets of recruitment challenges risk the UK’s stagflationary environment persisting, leading to a more uncertain interest rate outlook. We also need no more policy instability and yet one of the biggest risks to the outlook is political, namely the risk of a leadership challenge. The UK spent much of the second half of 2025 worrying about possible tax rises in the Budget. Now, with worst-case scenarios largely avoided, and the Autumn Budget in the rear-view mirror, hopes turn to an improvement in sentiment and a pickup in economic growth. Early indicators for December showed a mildly more positive environment, consumer confidence rose to -17, up two points from November, but it wasn’t enough to break out of its recent tight range. Similarly, the 0.6pt rise in the PMI business confidence in future trading expectations was modest given the degree of Budget-related uncertainty. More broadly, the economy has deteriorated: GDP growth was a meagre 0.1% q-o-q in Q3, real disposable income fell 0.8% q-o-q, the rate of unemployment rose to 5.1% in three months to October, and retail sales fell 0.1% m-o-m in November, suggesting a quieter-than-usual Black Friday. So, the small lift in sentiment in December is unlikely to translate into significantly better official data for that month or Q4 and reflects more of an ‘it could have been worse’ boost to sentiment. Source: Macrobond, GfK, S&P Global, HSBC Source: Macrobond, ONS, HSBC forecas https://www.hsbc.com.my/wealth/insights/market-outlook/uk-in-focus/out-with-2025-in-with-a-new-year/

2025-12-22 12:01

Key takeaways With exports galloping ahead, much of ASEAN delivered resilient growth in recent quarters… …but as trade begins to weaken, private consumption and investment will need to take up the slack. Fortunately, monetary and fiscal easing should help deliver a kick to growth in the Year of the Horse. Despite external headwinds, from weaker commodity prices to US tariffs, Indonesia’s growth may tick up thanks to greater fiscal spending. In Thailand, a looming election could mean renewed delays in fiscal disbursements, though exports have been a surprising bright spot. Malaysia remains among the star performers, not only continuing to gain global market share in sectors, like electronics, but also being a magnet for tourists that help power services. Singapore, like its manufacturing peers, was riding high in 2025, with extra spending for its 60th anniversary adding a further kick. A global trade downturn poses the biggest risk. For all the noise about tariffs, Vietnam keeps chugging along, not only thanks its vaunted export machine, but also due to vigorous reforms at home. Economy profiles Key upcoming events Source: LSEG Eikon, HSBC Indonesia Growth urgency Indonesia’s post-pandemic GDP growth has been sluggish, led partly by tight monetary and fiscal policy in the few years following the pandemic. We estimate that at the end of 2025, GDP will be c7% below its pre-pandemic trend. Having said that, the recent policy softening is clear. Bank Indonesia’s (BI) policy rate has been cut by 150bp in this cycle, and a string of fiscal stimuli have been announced through 2025. Indeed, recent data shows that domestic demand has started to improve. The latest PMI details show that new domestic orders are growing faster, even though new export orders are not. Other indicators, like consumer sentiment and truck sales, also point towards an improvement in activity. In 2026, a payback from front-loading could keep exports soft, but this weakness could be offset by a rise in domestic demand as the reduction in policy rates transmits through the system, and social welfare schemes see improved implementation. We forecast GDP to grow at 5.2% in 2026, a shade higher than the 5% in 2025. Yet, we think the output gap will remain open through the year. For growth to rise more sustainably, investment must rise, which drives the capacity of an economy to create jobs and incomes. Here, we find that households are dipping into savings to fund consumption. As a result, not much surplus remains for kickstarting investment. Corporates have excess savings, but investment depends on other factors, such as household demand visibility, global growth, and commodity prices, which do not seem too dependable. Government saving is falling as well, led by rising social welfare spending. Who will lead Indonesia’s investment? In good news, there is Danantara, the new sovereign wealth fund. Its key objective is to manage the country’s State-Owned Enterprises (SOEs) efficiently, and act as a vehicle for investment in strategic sectors. It plans to invest USD10bn in its first few months of operation, starting in October 2025. Alongside, it also aims to boost liquidity on Jakarta’s stock market. In the short-run, the challenge will be to efficiently implement the domestic investment projects announced. For a sustained rise in Danantara’s investment, revenue sources need to be diversified outside of the fiscal accounts. Here, the fund can look at other places. One, returns from investment projects should rise. Two, FDI inflows should gradually increase. We model the determinants of FDI inflows and find that they boil down to political and macro stability, and economic reforms. New domestic orders are rising faster Source: S&P Global PMI, HSBC Underlying inflation is near BI’s 2.5% target Source: CEIC, HSBC Malaysia ASEAN’s possible silver medallist While the tariff saga has been the dominant theme since “Liberation Day”, growth in some tradedependent economies has been, ironically, rather resilient. Malaysia is a notable example, with GDP growth accelerating to 2.4% q-o-q seasonally adjusted in 3Q, translating to 5.2% y-o-y. While it may be tempting to attribute this to trade front-loading, the economic strength is actually more broad-based. However, no doubt, trade helps, as net exports reversed to a positive growth contribution in 3Q25. Despite trade volatility, there are two notable trends. First, Malaysia’s exports to the US have moderated, reflecting the fading impact of front-loaded trade. However, second, Malaysia has benefitted from still-elevated AI-driven demand. While commodity exports remain in the doldrums, electrical machinery & electronics (E&E) exports continue to expand at an impressive double-digit pace. On top of trade, the recently signed Reciprocal Trade Agreement (RTA) between Malaysia and the US also reduces trade uncertainty, with Malaysia being the first economy in ASEAN to sign a deal. Outside of trade, Malaysia’s domestic strength provides much-needed resilience. While both public and private investments have moderated from their earlier double-digit growth, the moderation has been modest. They continue to benefit from an infrastructure push and data centre construction. Elsewhere, private consumption remains the backbone of Malaysia’s growth, growing consistently at c5% y-o-y. For one, the labour market continues to recover, with the unemployment rate falling to 3% and wages picking up. In addition, subsidies have also played a role. With even lower petrol RON95 prices, there are good reasons to believe in the sustained momentum in private consumption. The other tailwind to Malaysia’s retail sales is its booming tourism sector. Malaysia has seen a full recovery in tourism to 2019 levels, just behind Vietnam. In particular, it leads the region in welcoming Chinese tourists, exceeding 20% of their 2019 level. This is aided by a visa-free scheme with China. All in all, we have recently upgraded our growth forecast to 5% for 2025 (from 4.2%) and 4.5% for 2026 (from 4%). In addition, inflation remains well-behaved, as the headline CPI decelerated to 1.4% y-o-y YTD as of October. Given subdued inflation momentum, we have recently revised down our headline inflation forecast slightly to 1.4% (previously: 1.5%) for 2025 but keep our 2026 forecast at 1.7%. Malaysia continues to see sustained growth in electronics exports Source: CEIC, HSBC Subsidies are budgeted to fall 14% in 2026, though still remain at high levels Source: CEIC, Ministry of Finance Budget 2026, HSBC Philippines Monetary policy taking charge With domestic engines big enough to brag about, the Philippines is perceived by many to be insulated from the headwinds in trade. But domestic demand stumbled in 3Q25. Growth decelerated to 4.0% y-o-y, which was the slowest pace since 2011, barring the COVID-19 pandemic. The numerous super typhoons during the quarter were one of the main issues: household consumption dipped as weather conditions led to frequent work and school cancellations. But the main culprit was government spending. When the ambitious Build-Build-Build programme started in 2016, government infrastructure investments became a driving force for growth. However, due to controversies over flood-control projects, public capital disbursements have been falling by more than 20% y-o-y since July – pulling growth down by as much as 1.3ppt. The fiscal drag then had a domino effect on other aspects of the economy. The most important was private investment. For instance, business sentiment has fallen to its lowest level after the COVID-19 pandemic. Consequently, the share of firms which intend to expand their production in the following quarter has fallen to a post-pandemic low. Moving in parallel is a sharp decline in FDI applications. In all, we expect growth in 2026 and 2027 to come in below potential at 5.2% and 5.6%, respectively, with both private and government investment weighing on growth. We do think private consumption will pick up once weather conditions improve. For one, cheaper imports from China and easing global commodity prices have led to low and stable inflation. We expect inflation to remain below the midpoint of the Bangko Sentral ng Pilipinas’ (BSP) 2-4% target band, even throughout 2026 and 2027. Meanwhile, job creation remains strong with services exports shielded from the onslaught of tariffs. Both have helped bring household saving rates back up, improving the country’s current account dynamics. Narrowing the country’s current account deficit further is tighter fiscal policy since fewer infrastructure projects entails less demand for capital imports. This should then give leeway for the BSP to keep monetary policy accommodative. Like the spare tyre in the boot – the one that is typically smaller in size but enough to deliver a car to the repair shop – it will be necessary for monetary policy to make up for the fiscal drag, even if only partially. We expect the BSP to ease monetary policy once more to 4.25% with room for more if the Fed were to deepen its easing cycle further. Government infrastructure spending has fallen by more than 20% since July… Source: CEIC, HSBC …bringing business confidence to its lowest point since 2009, barring COVID-19 Source: CEIC, BSP, HSBC Singapore Another strong year The script may look familiar – it was also 3Q when the market saw a big upside surprise in GDP growth in 2024. The same thing has happened in 2025, when Singapore’s growth momentum was revised upwards from 1.3% q-o-q in the advance print to 2.4% in 3Q. This translated into a strong 4.2% y-o-y expansion, even higher than some emerging market (EM) economies in ASEAN. The data breakdown showed most of the upward revision came from manufacturing, which grew over 11% q-o-q seasonally adjusted. Electronics drove industrial production (IP) growth notably. This mirrors the trend in tech-driven economies, where AI-driven demand and trade front-loading have boosted growth. However, for Singapore, diversification is the key to its manufacturing outperformance. Sectors, like transport engineering, not only contribute to the manufacturing sector but also have boosted related services, such as wholesale. In addition, the pharmaceutical sector, though volatile in nature, lifted IP growth to almost 30% y-o-y in October. Besides trade, Singapore enjoys some domestic resilience, though it is a mixed picture. Investment growth has accelerated, on the back of an infrastructure push, like Changi Airport’s Terminal 5 construction. However, private consumption has slowed, though the labour market remains resilient. Given the large 3Q25 upside surprise, we have recently raised our GDP growth to 4.1% for 2025, from 2.8%. This puts our forecast slightly above the government’s forecast of “around 4%”, which has been raised from “ 1.5-2.5%” earlier. We have also recently raised our 2026 growth forecast to 2.0%, up from 1.7%. This would put us in the middle of the government’s forecast range of “ 1-3%”. In addition, inflation has finally picked up. After being subdued at 0.5% on average in the first nine months of 2025, core inflation rose 1.2% y-o-y in October, though in part due to base effects. We expect core inflation to grow beyond 1% y-o-y from 4Q25. Overall, we recently revised upward our core inflation forecast slightly to 0.7% (from 0.6%) for 2025 and to 1.3% (from 0.9%) for 2026. While a low-inflation environment opens the door for the Monetary Authority of Singapore (MAS) to ease again, we expect the MAS to stay put through our forecast horizon. The MAS’ primary focus is no doubt growth, but fiscal policy should take the lead in prompting growth if headwinds materialise. Singapore’s IP has been strong thanks to both pharma and electronics production Source: CEIC, HSBC Singapore’s core inflation momentum has been picking up slightly Source: CEIC, HSBC Thailand Changes Uncertainty lingered over Thailand during the second half of the year, but the private sector – calm and collected – helped sustain the economy. Tensions between Cambodia and Thailand escalated in July, disrupting trade between the two neighbours, while stoking safety concerns for potential tourists. There were even concerns that the US might impose higher tariff rates on both countries if tensions did not de-escalate (SCMP, 13 November 2025). However, as tensions ensued, Thailand found itself in a difficult position. Thailand’s Constitutional Court removed then Prime Minister, Paetongtarn Shinawatra, from office over ethical charges on 29 August 2025 (Nikkei, 29 August 2025). The cabinet was then dissolved and, for the third time in three years, Thailand was in a search for a new Prime Minister. With the help of the opposition, the People’s Party, the Bhumjaithai party formed a minority government with Anutin Charnvirakul at the helm. Amid all the uncertainty in politics and policy, growth disappointed in the third quarter of 2025, falling by 0.6% q-o-q seasonally adjusted. Services exports continued to contract with the tourism sector still finding its feet after its stumble earlier in the year. Meanwhile, passing the baton from one Prime Minister to another was a two-month process, which eventually led to fiscal standstill. Government spending fell, dragging growth down by as much 1.1ppt. However, despite the uncertainty that lingered, the private sector kept its ground. Private consumption, supported by low inflation, remained steady, while private investment was robust. In fact, foreign investments flowed in – defying uncertainties around tariffs and global trade – and goods exports still grew as electronics manufacturers captured the boom in AI-related investments, all while gaining market share in the US at the expense of China. However, just like elsewhere, we expect 2026 to be a tough year. Payback from front-loading demand will likely be a headache for the economy, not to mention the potential slowdown in government spending with Thailand expected to undergo another election in February 2026. Nonetheless, growth opportunities are within reach – the economy just needs to grab them. There are still billions of baht worth of investments committed to the digital sector that have yet to materialise, the size being large enough to boost growth. Thailand is also in the position to be a vital part of the ongoing boom in data centres, with the economy having deep supply chains in producing hardware components, such as hard disk drives and printed circuit boards. Amid changes in government, the fiscal engines sputtered and growth slowed Source: CEIC, HSBC FDI surged, but there are still billions committed that have yet to materialise Source: CEIC, HSBC Vietnam In the 8% league Despite trade uncertainty, Vietnam’s growth continues to shine. After 2Q, Vietnam delivered another significant upside surprise in 3Q25, with GDP expanding 8.2% y-o-y. The outperformance easily places Vietnam as the fastest-growing economy in ASEAN, again. What surprised most is the resilience of trade, with both exports and imports growing close to 20% y-o-y in 3Q. As a result, the trade surplus more than doubled in 3Q from 1H25. This indicates that Vietnam has widened its trade surplus with trading partners other than the US, although the latter remains its biggest exporting destination with one-third of the total share. Similar to other tech-exposed economies, Vietnam has also benefitted from surging AI-driven demand. In particular, its electronics exports to the US alone jumped 150% y-o-y on a three-month moving-average (3mma) basis, pushing Vietnam’s total exports to the US up by 30% y-o-y. In addition, the services sector continues to see strong growth. Consumer-oriented retail sales are enjoying some meaningful improvements. Meanwhile, tourism-related sectors continue to boom, as Vietnam has turned into a popular destination for Chinese tourists, despite not having a visa-free scheme. That said, Vietnam is likely to miss its target of attracting 25 million tourists. On the demand side of the economy, consumption expanded over 8% y-o-y, while investment grew close to 10% y-o-y in 3Q. In particular, the focus on accelerating mega infrastructure projects has been a priority. That said, there is still room to expand further, as the disbursement rate of public investment is only 50% of the annual target as of 3Q (VNEconomy, 8 October). All things considered, we have recently upgraded our growth forecast to 7.9% (from 6.6%) for 2025 and 6.7% (from 5.8%) for 2026. The government raised its 2025 growth target to 8.3-8.5% and announced its 2026 growth target at 10%. However, trade uncertainties are not over yet. Outside of growth, inflation has decelerated to 3.3% y-o-y YTD through November. Despite some recent flood-caused food disruptions, we expect the underlying trend to remain well below the State Bank of Vietnam’s (SBV) inflation target ceiling of 5%. We have recently raised our inflation forecast slightly to 3.3% for 2025 (from 3.2%) and 3.5% for 2026 (from 3.2%). Vietnam’s monthly trade surplus has shrunk Source: CEIC, HSBC Vietnam leads ASEAN in tourism recovery but is still behind its annual target Source: CEIC, HSBC. NB: MA data as of Aug, VN as of Nov, and the rest as of Oct. https://www.hsbc.com.my/wealth/insights/market-outlook/asean-in-focus/consumption-and-investment-to-take-the-reigns/