Moreover, the above forecast is still considered an improvement compared to the 5% for 2023. GDP growth in Q1/2024 is reduced to 5.7% (from 6.7% in Q4/2023). The bank lowered its growth forecast for Q2 to 5.3% (from 6.3%) and for Q3 to 6% (from 7.2%). But growth in Q4 is expected to recover to 6.7%.
According to economists from Standard Chartered, trade, a key growth driver and investment for Vietnam, faces challenges in the short and long term. However, Vietnam’s economy is still on track to recovery despite the risks. Retail sales continue to rise strongly in Q1.
Standard Chartered also lowered its inflation forecast for 2024 to 4.3% from 5.5% due to lower-than-expected inflation in Q1. The bank forecasts that interest rates will be kept at 4.5% until the end of Q3 and could increase by 50 basis points in Q4 on the likelihood of inflation as growth picks up.
Mr. Tim Leelahaphan, Economist for Thailand and Vietnam, Standard Chartered Bank
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Mr. Tim Leelahaphan, Economist for Thailand and Vietnam, Standard Chartered Bank said: “Vietnam is improving its position in the global supply chain, attracting foreign investment thanks to its favorable investment environment and impacts of trade relations between the US and China. With the economy on track to recovery, we think monetary policy will be less supportive.”
According to Mr. Tim, Vietnam’s monetary policy will balance against improving external developments and rising foreign exchange reserves. Strong export growth will support the currency, while imports are also improving. The bank forecasts a current account surplus of 3.5% of GDP in 2024.
