ADB revises Vietnam 2023 growth downwards to 5.2%

The Asian Development Bank (ADB) has revised Vietnam’s 2023 GDP growth down to 5.2% from its September estimate of 5.8% but maintained its 6% forecast for next year.

The December edition of the bank’s Asian Development Outlook (ADO) notes that even with the downward revision, Vietnam’s growth is higher than the Pacific’s average of 3.5%, Southeast Asia’s 4.3%, and developing Asia’s (including China) 4.9%.

In Southeast Asia, Vietnam’s 5.2% growth is second highest behind the Philippines (5.7%) and higher than Indonesia (5%), Malaysia (4.2%), Singapore (1%), and Thailand (2.5%).

Similarly, the 2024 prediction of 6% is higher than Indonesia (5%), Malaysia (4.6%), Singapore (2.5%), Thailand (3.3%) and the Southeast Asia average of 4.7%, but below the Philippines (6.2%).

The ADO December report notes that Vietnam’s inflation could reach 3.8% in 2023, below the country’s target of 4%; and forecasts 4% for 2024. Vietnam’s inflation figure is higher than Southeast Asia’s 3.3% average, but lower than the Pacific region’s 4.5%.

The report says Vietnam’s weak growth of 4.2% in the first nine months of 2023 reflected the cumulative impact of falling external demand, weak budget execution and sluggish recovery in jobs and domestic consumption. It says “economic growth is being impaled by lower industry and services output.”

Vietnam’s prudent and proactive monetary policy, supported by price controls on gasoline, electricity, food, health care, and education, should keep inflation in check, the report says.

All three growth engines of Vietnam’s economy - investment, exports and consumption - carry brighter prospects for 2024 after struggling this year due to weaker external demand, Deputy Minister of Planning and Investment Tran Quoc Phuong said last week.

He reckoned that the GDP growth target of 6-6.5% set for 2024 will be challenging given global uncertainties and other unpredictable issues.

Vietnam’s GDP expanded 4.24% year-on-year in the first three quarters and some updated forecasts have estimated the whole year’s growth at around 5%.

In November, the National Assembly, Vietnam’s supreme legislative body, approved a resolution requiring the government to achieve GDP growth of 6-6.5% in 2024.

In its newly-released “Vietnam Banks - Peer Review 2023” report, Fitch Ratings says Vietnam’s economic growth can improve to over 6.3% in 2024 and 7% in 2025.

In October, a Standard Chartered Bank report said it has lowered Vietnam’s 2023 GDP growth forecast to 5% from the previous 5.4%, reflecting weaker-than-expected performance and a gloomier global outlook. However, the bank maintained a robust 2024 GDP growth forecast of 6.7%, with 6.2% in the first half and 6.9% in the second.