Standard Chartered Bank maintained robust 2024 GDP growth forecast of 6.7% for Vietnam. (Photo: VNA) HCM City (VNA) – Standard Chartered Bankmaintained robust 2024 GDP growth forecast of 6.7% for Vietnam in its latestmacro-economic updates about the Southeast Asian nation.
The bank has lowered the country’s 2023 GDP growth to5.0% y/y from the previous 5.4%. The revised forecast would require Q4 growthof 7.0% y/y which may still be challenging.
According to the report, macro indicator shows atentative improvement; trade has yet to signal a clear manufacturing rebound.However, domestic recovery continues and is likely to strengthen further, witha robust retail sales.
Construction, accommodation sectors maintain stronggrowth year to date; manufacturing has started to expand. External outlook isimproving with the current account surplus rising to 3.5% of GDP in 2024 andfrom 2.0% in 2023.
Inflation forecast for 2023 is revised up to 3.4% y/yfrom 2.8% previously. The Q4 inflation rate is forecast to reach 4.3% (from2.7%) and likely to rise higher next year. Inflation may result insearch-for-yield behaviour and increased financial instability risks. Notably,education, housing, food, transport costs have been major contributors to therecent inflation drive.
The bank has lowered the country’s 2023 GDP growth to5.0% y/y from the previous 5.4%. The revised forecast would require Q4 growthof 7.0% y/y which may still be challenging.
According to the report, macro indicator shows atentative improvement; trade has yet to signal a clear manufacturing rebound.However, domestic recovery continues and is likely to strengthen further, witha robust retail sales.
Construction, accommodation sectors maintain stronggrowth year to date; manufacturing has started to expand. External outlook isimproving with the current account surplus rising to 3.5% of GDP in 2024 andfrom 2.0% in 2023.
Inflation forecast for 2023 is revised up to 3.4% y/yfrom 2.8% previously. The Q4 inflation rate is forecast to reach 4.3% (from2.7%) and likely to rise higher next year. Inflation may result insearch-for-yield behaviour and increased financial instability risks. Notably,education, housing, food, transport costs have been major contributors to therecent inflation drive.
Illustrative image (Source: VNA) “The property market may require further liquiditysupport, as measures so far appear to have only reduced short-term repaymentpressure. Low interest rates, new project approvals, and a pick-up in buyersentiment could help the market,” said Tim Leelahaphan.
Earlier, the United Overseas Bank (UOB)’s GlobalEconomics & Market Research Unit has cut the full-year growth forecast forVietnam to 5% from the earlier 5.2%.
Michael Kokalari, a chartered financial analyst (CFA)and Chief Economist at Ho Chi Minh City-based VinaCapital, forecast that Vietnam’sGDP will likely grow by less than 5% in 2023 due to lower demand for “Made inVietnam” products.
“We expect Vietnam’s GDP growth to rebound to 6.5%next year, driven by a recovery in exports, which will in-turn be closelyaccompanied by a rebound in Vietnam’s manufacturing sector output from flatgrowth in 2023 to 8-9% in 2024, versus the sector’s 12% long-term averagegrowth, pre-COVID.”
“Our optimism for a manufacturing-driven recovery ofVietnam’s GDP growth in 2024 stems from an analysis of the cause of thesector’s problems in 2023, which was an over-accumulation of inventories by USretailers and other consumer firms in 2022,” he explained.
Inventories surged by more than 20% yoy in late-2022,because firms over-ordered during the COVID supply-chain disruptions of 2021,and because expectations of a post-COVID spending boom did not materialise asretailers and other consumer companies had expected.
Instead of purchasing more products when COVIDlockdowns were lifted, consumers splurged on services such as travelling andeating out. Consequently, US firms have been working through this excessinventory throughout 2023, with inventory depletion at the fastest pace inalmost 10 years; this has been the main factor weighing on Vietnam’s exportsand manufacturing output this year. However, a plethora of anecdotal andhigh-frequency economic data in the US and in Vietnam indicates that thisphenomenon is now coming to an end, which is the basis for the belief thatorders and output from factories in Vietnam are now recovering, he said./.
VNA
