Standard Chartered: Economic Recovery Momentum in Vietnam Remains Positive

In the latest economic update report, Standard Chartered (UK) forecasts that Vietnam's GDP in the second quarter of 2024 could reach 5.3%. It means the country still maintains a very positive economic recovery momentum.

Fanasy Nguyen Le

June 25, 2024 | 13:21

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In particular, Standard Chartered's report predicts that Vietnam's GDP growth in the second quarter of 2024 will reach 5.3%, in the context that inflation may continue to increase. However, growth in the second quarter is likely to slow down.

In June, Vietnam's retail sales growth is forecast to decrease to 8.2% over the same period (May was 9.5%). While export growth will decrease to 14.2% over the same period (May was 15.8%), electronics exports will continue to improve this year.

Vietnam's imports growth and industrial production growth in June are likely to reach 26% (May was 29.9%) and 5.2% (May was 8.9%) respectively.

Standard Chartered: Econpmic Recovery Momentum in Vietnam Remains Positive

A view of Ho Chi Minh City (Photo: fototrav)

However, Vietnam's inflation may increase to 4.5% over the same period (from 4.4% in May), marking this the third consecutive month of inflation above 4%. Prices for education services, housing and construction materials, health care and food have fueled inflation recently.

This trend may maintain in the coming months. Standard Chartered's report presents challenges in the third quarter that Vietnam might face, namely price pressures, exchange rates and weakening global demand.

Standard Chartered forecasts that the State Bank of Vietnam (SBV) may increase refinancing interest rates by 50 basis points in the fourth quarter of 2024 in the context of rising inflation. Exchange rate factors will likely promote interest rate increases in the fourth quarter or earlier. Actions from the US Federal Reserve (Fed) will be a key factor affecting SBV's policy decisions.

Multiple tasks directed by the Government to stimulate growth and control inflation

The government recently issued Resolution No. 93/NQ-CP concerning the principal tasks and solutions for fostering growth, controlling inflation, and stabilizing the macroeconomy, cited Customs News.

The resolution sets a goal to persist in prioritizing growth enhancement aligned with consolidating macroeconomic stability, controlling inflation, and ensuring the major balances of the economy. The aim is to manage harmoniously, effectively, and maintain a reasonable balance between growth and inflation control; striving for a GDP growth rate to reach the upper target set by the National Assembly (6 - 6.5%) and controlling the CPI growth rate to achieve the lower target set by the National Assembly (4 - 4.5%).

At the same time, it calls for strict control of budget deficits, public debt, government debt, and the country's foreign debt within the limits allowed by the Resolution and Conclusions of the Central Committee, National Assembly.

The resolution continues to prioritize growth in the export sector. It tasks the Ministry of Industry and Trade to lead, and coordinate with the Ministry of Foreign Affairs, related ministries, and agencies to support businesses in effectively utilizing commitments in FTAs that have been signed; to expand and diversify the export market; to intensify negotiations, and sign new FTAs.