Singapore bank UOB maintains Vietnam GDP growth forecast at 6.5%

Singapore's United Overseas Bank (UOB) has maintained its forecast on Vietnam’s GDP growth at 6.5% and core inflation at 3.7% in 2022.

In the first six months of the year, the production sector recorded a 9.24% rise year-on-year, it noted in a report. Third-quarter economic expansion was predicted at 7.6%.

With upward price pressure largely driven by rising transport prices and the Russia-Ukraine conflict showing no signs of abating, UOB predicted Vietnam's core inflation would stand at 3.7% in 2022 and climb to 5% in 2023.

The bank believed that the State Bank of Vietnam would keep its policy interest rate stable to support economic recovery efforts as inflation is controlled.

UOB also forecast the current refinance rate at 4% and the rediscount rate of 2.5% to remain at these record lows until at least the end of 2022.

The World Bank on June 7 raised Vietnam’s GDP prediction this year to 5.8% from 5.3% in its April forecast.

The revision is derived from a revival of activity supported by the removal of Covid-related restrictions in the country. “Vietnam's economic expansion is expected to strengthen further to 6.5% in 2023 and 2024.”

Credit rating agency S&P Global Ratings in late May revised up the country’s long-term sovereign credit rating to BB+, a "stable" outlook. Vietnam is one of only two economies in the Asia-Pacific region to have been upgraded since the beginning of the year, the other being Taiwan.

HSBC last week revised down its forecast on Vietnam’s inflation this year to 3.5% from the 3.7% it predicted in May due to stable domestic food prices.