The revision was due to lower-than-expected first-quarter 2024 GDP growth in Vietnam (down to 5.7% from 6.7% in the fourth quarter of 2023) and challenges from global trade.
Tim Leelahaphan, Economist for Thailand and Vietnam, Standard Chartered Bank
However, the forecast still marks an improvement from 2023’s 5.0% pace. The bank lowered its growth forecast for the second quarter to 5.3% (from 6.3%) and for the third quarter to 6.0% (from 7.2%). But growth in the fourth quarter is expected to rebound to 6.7%.
WB: Vietnam among top economies in 2024 with 5.5% growth
01/04/2024 11:58
Vietnam’s trade, a major growth driver and source of investment, also faces challenges in the near and long term, according to the Standard Chartered economist. Nevertheless, the Vietnamese economy is still on the path to recovery despite the risks. Retail sales continued to grow strongly in the first quarter.
Standard Chartered also lowered its 2024 inflation forecast to 4.3% from 5.5%, after lower-than-expected first-quarter inflation. The bank predicts the interest rate will be maintained at 4.5% until the end of the third quarter and may be increased by 50 basis points in the fourth quarter amid possible growth-driven inflation.
Tim Leelahaphan, Economist for Thailand and Vietnam at Standard Chartered Bank, said: “As Vietnam is moving up the global value chain, attracting foreign direct investment due to its favorable investment climate and the impact of the US-China trade war, we believe monetary policy will become less supportive as the economy recovers.”
According to Tim, the Vietnamese dong monetary policy will be balanced against external improvements and a growing foreign exchange reserve. Strong export growth will provide support for the currency while imports are also recovering. The bank forecasts a current account surplus of 3.5% of GDP in 2024.
Recently, in its April 2024 Vietnam Economic Update, the World Bank (WB) noted that the Vietnamese economy is showing mixed signals of recovery and predicts GDP growth of 5.5% in 2024, rising to 6.0% in 2025.
According to the WB, exports are recovering and are projected to grow 3.5% in 2024; domestic consumption and private investment are also picking up. The real estate sector is forecast to recover more strongly in the latter half of this year and next year. Inflation is expected to edge up to 3.5% in 2024.
In its April 2024 update, the Asian Development Bank (ADB) forecasts Vietnam’s economic growth to reach 6.0% in 2024 and 6.2% in 2025.
