Standard Chartered lowers Vietnamese GDP growth forecast to 6%

The report outlines that it the country has still recorded an improvement from 5.0% in 2023. The GDP growth in the first quarter of the year stood at 5.7% compared to the previous 6.7% seen in the fourth quarter of last year.

The bank also lowered the growth forecast in the second quarter and the third quarter to 5.3% from 6.3% and 6.0% from 7.2%, respectively, while the fourth quarter’s growth is expected to be recovered to 6.7%.

According to Standard Chartered’s economist, trade makes up a key source of growth and investment for the Vietnamese side, although the country also faces short- and long-term challenges. Despite these issues, Vietnamese recovery remains intact despite risks, with retail sales growth still being robust in the first quarter of the year.

Standard Chartered also lowered its 2024 inflation forecast to 4.3% from 5.5% to reflect lower-than-expected inflation in the first quarter.

They anticipate rates to stay on hold at 4.5% until end of the third quarter of the year and could be raised by 50 basic percentage points in the fourth quarter in response to growth-driven inflation.

“Vietnam is improving its position in global supply chains. Foreign investment continue to be attracted by a favourable investment environment and potential ramp-up of US-China trade tensions,” said Tim Leelahaphan, economist for Thailand and Vietnam of Standard Chartered.

“With economic recovery starting to gain momentum, we think there will be less need to provide monetary policy support,” he added.

According to Leelahaphan, there is a balanced view on the VND given improvements made on the external front and reserve rebuilding.

The think tank analyzes that strong export growth will provide some support for the currency, while imports point to further gains. The bank therefore forecasts a current account surplus of 3.5% GDP in 2024.