Standard Chartered lowers Vietnam's GDP growth forecast to 6%

On April 24, Standard Chartered Bank released a macroeconomic report on Vietnam, lowering its GDP growth forecast to 6% in 2024, compared to the previous forecast of 6.7% due to lower-than-expected growth in the first quarter and challenges from global trade. However, this forecast is still considered an improvement compared to the 5.0% forecast for 2023.

GDP growth in Q1/2024 is expected to slow to 5.7% (from 6.7% in Q4/2023). The bank has lowered its growth forecast for Q2 to 5.3% (from 6.3%) and Q3 to 6.0% (from 7.2%). But Q4 growth is expected to recover to 6.7%.

Trade, Vietnam's key source of growth and investment, also faces short- and long-term challenges, according to an economist from Standard Chartered Bank.

Standard Chartered also lowered its 2024 inflation forecast from 5.5% to 4.3% due to lower-than-expected Q1 inflation. The bank forecasts interest rates will remain at 4.5% until the end of Q3 and could rise 50 basis points in Q4 amid the possibility of growth-led inflation.

“Vietnam is improving its position in the global supply chain, attracting foreign investment thanks to its favorable investment environment and the potential impact of the US-China trade relationship. With the economy on the road to recovery, we believe monetary policy will need to be less supportive,” said Tim Leelahaphan, economist for Thailand and Vietnam at Standard Chartered Bank.

According to Mr. Tim, the Vietnamese Dong monetary policy will be balanced based on improvements in external factors and increasing foreign exchange reserves. Strong export growth will support the currency while imports will also improve. The bank forecasts the current account surplus to reach 3.5% of GDP by 2024.