Stockbroker raises Vietnam’s 2024 GDP growth forecast to 6.5%

KB Securities Vietnam has revised up its projection for Vietnam’s 2024 GDP growth to 6.5% from the earlier 6%, after a higher-than-expected reading in the first half.

The country’s economy expanded 6.42% in the first half of 2024, the second fastest growth rate for the six-month period in the 2020-2024 period, behind the 6.58% in 2022 when Vietnam opened up post-pandemic, according to government data.

In H2/2024, KB Securities Vietnam (KBSV), owned by South Korea’s KB Financial Group, expects the local economy to further improve, driven by a recovery of manufacturing and exports thanks to stronger external orders; continued resilient foreign direct investment (FDI) inflows; a boost to public investment; and a recovery of stimulus-driven domestic demand and the real estate market.

Downside risks to the stockbroker’s forecast include inflation and the USD/VND exchange rate staying high and geopolitical risks exerting pressure on energy and transportation prices, leading to slower-than-expected rate cuts by central banks.

KBSV forecasts the country’s inflation to end the year at 3.8%, lower than the government target of 4-4.5%, after the consumer price index (CPI), the main measure of inflation, came in at 4.08% in H1.

The CPI is forecast to be well controlled over the coming months thanks, to more stable oil price expectations and an extended VAT cut.

The Central Institute for Economic Management (CIEM), under the Ministry of Planning and Investment, has recently revised upward its 2024 GDP growth projections, initially put at 6.13-6.48%.

In a first updated scenario, the CIEM expects GDP to grow 6.55% this year if exports are to rise 9.54% year-on-year and a trade surplus of $5.7 billion is ensured.

In a second scenario, the CIEM projects this year’s GDP growth at 6.95%, assuming exports grow11.64% with a trade surplus of $7.3 billion.

The Ministry of Planning and Investment earlier this month revised up its GDP growth projections to 6.5-7.0%.

Meanwhile, the Asian Development Bank and the World Bank have kept their respective 2024 forecasts for Vietnam unchanged at 6% and 5.5%.