Standard Chartered revises down Vietnam's 2023 GDP growth forecast to 6.5%

The bank also turned more cautious on the external front. April macro indicators showed a moderation. Exports declined 17.1% year-on-year, imports fell 20.5% year-on-year, and industrial production barely rose; the trade surplus rose to US$1.5 billion from US$700 million in March.

In the first 4 months of the year, exports fell 11.8% year-on-year; imports were down 15.4% year-on-year with a trade surplus of US$6.4 billion. Inflation was 2.8% in April, easing for the third month in a row and down from 4.9% in January; core inflation rose 4.6% as retail sales saw a robust growth of 11.5%. Disbursed FDI in January – April 2023 totalled US$5.9 billion, down 1.2% year-on-year; pledged FDI was US$8.9 billion, down 17.9%.

“The significant import contraction points to slowing economic activity given Vietnam’s import-intensive nature, despite still-strong domestic consumption,” said Tim Leelahaphan, Economist for Thailand and Vietnam, Standard Chartered Bank.

Standard Chartered forecasts the State Bank of Vietnam (SBV) will make another 50bps cut in the refinancing rate to 5% by the end of second quarter, followed by rates on hold until end-2025. However, it sees upside risk to the rate forecast, especially towards year-end, as the SBV may focus more on financial stability than growth.

“The SBV has shifted to a pro-recovery stance since the start of 2023. In addition to cutting rates, it is aiding businesses facing difficulties by giving them more time to address liquidity shortages. In April, it has allowed easier loan terms, including delaying loan repayments (by up to 12 months) and providing rate waivers. The property market may need further liquidity support, as measures so far appear to have only reduced short-term repayment pressure,” said Tim.