Vietnam Sustains Highest GDP Growth Rates in Southeast Asia over Last Decade: US Website

Vietnam’s GDP grew 5.3% in the third quarter of this year. Photo: VNA

As Vietnam’s GDP grew 5.3% in the third quarter of this year, the growth engine is still in full swing, boosted by households deploying excess savings accumulated through the Covid-19 pandemic, according to the article published on October 25.

Alongside geopolitical tailwinds and sooner-than-expected rate cuts by the State Bank of Vietnam, it is perhaps no surprise that Vietnam has been the best-performing market in the region, it said.

Yet, the H1 optimism has eased over the last month, as investors price in Vietnam's linkages to external demand weakness across its major trading partners like the US, the EU and China. Also concerning is the re-emergence of inflationary pressures from oil and rice prices (major components of Vietnam's consumer inflation gauge), which will inevitably delay the aggressive rate-cut cycle for now.

However, according to the article, these commodity pressures are temporary and will not affect the SBV’s interest rate policy. It is expected that after a short period of monetary tightening, interest rates will be lowered, thereby boosting lending activities and helping real estate firms address inventories.

Vietnam's growth engine is still in full swing. Photo: Vietnamnet

While weaker trade and transitory inflation pressures have triggered a de-rating in H2 2023, Vietnam's structural earnings growth isn't impaired and should continue to surprise to the upside in the coming years, it said.

Despite the fact that trade has declined somewhat and inflationary pressures have increased, income growth according to Vietnam's economic structure has not decreased and will continue to increase unexpectedly in the coming years.

According to the article, recent news flow shows that Vietnam is very close to emerging market reclassification – an event that will bring more benefits to the country.

Standard Chartered Bank maintained robust 2024 GDP growth forecast of 6.7% for Vietnam in its latest macro-economic updates about the Southeast Asian nation.

Standard Chartered Bank maintained robust 2024 GDP growth forecast of 6.7% for Vietnam. Photo: tapchitaichinh.vn

The bank has lowered the country’s 2023 GDP growth to 5.0% y/y from the previous 5.4%. The revised forecast would require Q4 growth of 7.0% y/y which may still be challenging.

According to the report, macro indicator shows a tentative improvement; trade has yet to signal a clear manufacturing rebound. However, domestic recovery continues and is likely to strengthen further, with a robust retail sales.

Construction, accommodation sectors maintain strong growth year to date; manufacturing has started to expand. External outlook is improving with the current account surplus rising to 3.5% of GDP in 2024 and from 2.0% in 2023.

Inflation forecast for 2023 is revised up to 3.4% y/y from 2.8% previously. The Q4 inflation rate is forecast to reach 4.3% (from 2.7%) and likely to rise higher next year. Inflation may result in search-for-yield behavior and increased financial instability risks. Notably, education, housing, food, transport costs have been major contributors to the recent inflation drive./.

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