The lender said in a note it made the revision after growth in the first quarter was lower than expected. Vietnam's GDP grew at 4.48 percent in the first quarter, according to the General Statistics Office.

HSBC said however that given an upswing in the tech cycle, consistent FDI inflows and multiple free trade agreements, Vietnam remains among the brightest prospects in Asia.

"Exports in the first quarter rose over 20 percent year-on-year, driven by burgeoning demand for electronics and machine equipment. In particular, [Vietnam] has benefited from an extended strong global tech cycle and unwavering FDI interests."

It forecast inflation of around 3 percent for 2021, well below the State Bank of Vietnam’s 4 percent ceiling.

Despite external resilience, the recovery in domestic demand has stalled, given strict the social distancing measures due to the new outbreak, the bank said.

With the third wave which began in late January under control, domestic demand is likely to revive in due course.

HSBC revised upward its growth forecast for 2022 by 2 percentage points to 8.5 percent.

The World Bank has forecast Vietnam to be among the fastest growing economies in East Asia and the Pacific in 2021 with a likely rate of 6.6 percent.

Standard Chartered Bank has forecast Vietnam to grow at 7.8 percent this year, with manufacturing driving the revival.

The Asian Development Bank and the IMF have forecast 6.1 percent and 6.5 percent rates.