The reason is that Vietnam’s GDP growth in the first quarter of 2024 is lower than expected (down to 5.7% from 6.7% in the fourth quarter of 2023) and challenges from global trade.
Mr. Tim Leelahaphan, Thailand and Vietnam economist, Standard Chartered Bank
However, this forecast is still considered an improvement compared to 5.0% in 2023. The bank lowered its growth forecast for the second quarter to 5.3% (from 6.3%) and the third quarter to June .0% (from 7.2%). But fourth-quarter growth is expected to recover to 6.7%.
According to an economist from Standard Chartered Bank, trade, an important source of growth and investment for Vietnam, also faces short- and long-term challenges. However, Vietnam’s economy is still on the recovery path despite risks. Retail sales still grew strongly in the first quarter.
Standard Chartered also lowered its 2024 inflation forecast from 5.5% to 4.3% due to lower-than-expected first quarter inflation. The bank forecasts that interest rates will be kept at 4.5% until the end of the third quarter and may increase by 50 basis points in the fourth quarter to face the possibility of inflation due to growth promotion.
Mr. Tim Leelahaphan, Thailand and Vietnam economist, Standard Chartered Bank, said: “Vietnam is enhancing its position in the global supply chain, attracting foreign investment thanks to a favorable investment environment. and the potential influence of US-China trade relations. With the economy on the road to recovery, we believe that monetary policy will need less support.”
According to Mr. Tim, Vietnam Dong’s monetary policy will be balanced based on improvements from external factors and increased foreign exchange reserves. Strong export growth will support the currency while imports also improve. The bank forecasts the current account surplus will reach 3.5% of GDP by 2024.
Recently, the World Bank (WB) in its report Update on Vietnam’s economic situation in April 2024 noted that Vietnam’s economy is showing different signs of recovery and forecasts that economic growth will reach 5.5% in 2024 and gradually increase to 6% in 2025.
According to the World Bank, exports are recovering, expected to increase by 3.5% in 2024; Domestic private consumption and investment are also on the rise. The real estate sector is expected to recover stronger at the end of this year and next year. Inflation is forecast to increase slightly to 3.5% in 2024.
The Asian Development Bank (ADB) in its April 2024 update report forecasts that Vietnam’s economy will grow by 6% in 2024 and 6.2% in 2025.
