Standard Chartered revises down Vietnam GDP growth forecast to 6%

Standard Chartered Bank has lowered Vietnam's 2024 GDP growth forecast to 6% from 6.7% in January due to lower-than-expected Q1 growth and global trade headwinds.

However, it is still an improvement from 5.05% in 2023, according to the bank's macro-economic updates about Vietnam released on Wednesday.

The country's Q1/2024 GDP growth moderated to 5.7% from 6.7% in Q4/2023.

The bank lowered growth forecast to 5.3% year-on-year for Q2 from 6.3% in January, and to 6% for Q3 from 7.2%. But Q4 growth is expected to recover to 6.7%.

"Trade, a key source of growth and investment for Vietnam, also faces short and long term challenges. However, Vietnam’s recovery remains intact despite risks. Retail sales growth was still robust in Q1," the release noted.

2024 inflation is forecast at 4.3% from 5.5% to reflect lower-than-expected Q1 inflation. Rates to stay on hold at 4.5% until end-Q3 and could be raised by 50 basic points in Q4 in response to growth-driven inflation.

“Vietnam is improving its position in global supply chains. Foreign investment continue to be attracted by a favourable investment environment and potential ramp-up of US-China trade tensions. With economic recovery starting to gain momentum, we think there will be less need to provide monetary policy support,” said Tim Leelahaphan, Standard Chartered economist for Thailand and Vietnam.

There is a balanced view on the VND given improvements on the external front and reserve rebuilding. Strong export growth provides some support for the currency. Imports point to further gains, according to the release. The bank forecasts a current account surplus of 3.5% GDP in 2024.

In early April, Maybank Securities Limited (MSVN) predicted that Vietnam’s economy is expected to expand 5.8% in 2024 from 5.05% last year, driven by exports and domestic consumption.

The subsidiary of Malaysia-headquartered Maybank – among the top five banks in Southeast Asia said it expected a robust revival in the second half of 2024 and attributed the first-quarter GDP growth rate of 5.7% to significant demand overseas and recovering local demand.

The Asian Development Bank (ADB) has retained Vietnam's economic growth forecast this year at 6%, above developing Asia's average of 4.9% and developing Asia (excluding China)'s average of 5%.

Earlier, the ASEAN+3 Macroeconomic Research Office (AMRO) said Vietnam’s GDP growth could reach 6% in 2024 and 6.5% in 2025. Vietnam’s 6% figure for 2024 is the third highest in the region, only behind the Philippines with 6.3% and Cambodia with 6.2%.

In a report released in early April, HSBC said that given a weaker-than-expected Q1 GDP growth, it had kept its Vietnam economic expansion forecast unchanged at 6% for 2024. Singapore-based UOB bank predicted that Vietnam would grow 6% this year, compared to the official 6-6.5% growth target.