Vietnam economic expansion to hit 5.1% in Q3: Standard Chartered

Vietnam’s GDP growth is likely to pick up to 5.1% year-on-year in Q3 this year, from 4.1% in Q2, according to Standard Chartered Bank.

In its recent global research report titled “Vietnam Macro: Q3 GDP to show ongoing recovery”, the bank predicted a rebound in H2 of the year, after early signs of a recovery in Q2.

The country’s economic expansion accelerated to 4.14% in Q2 from 3.32% in Q1, according to government data.

The bank keeps its 2023 GDP growth forecast for Vietnam unchanged at 5.4%.

September data is likely to show a slight improvement over August, supported by retail sales, Standard Chartered said. September retail sales growth is expected to stay robust at 8.2% from a year earlier and industrial production growth is set to pick up to 3.2%.

Exports are predicted to fall 6.2% and imports 7% in September, both weaker than the respective figures for August. The trade surplus may narrow to $1.3 billion from $3.82 billion in August.

Inflation may rise again to 3.2% year-on-year from 3% in August, the bank predicted.

Vietnam received close to 7.8 million foreign visitors in the first eight months of 2023, close to the full-year target of 8 million. However, the recovery remains tentative – trade is still contracting, manufacturing could stay lacklustre for some time, and FDI recovery prospects are unclear.

“While easing price pressures should allow policy makers to focus on growth, renewed concerns about an inflation rebound in H2 could deter such a move. With the economic recovery starting to gain momentum, there should be less need for monetary policy support,” Tim Leelahaphan, economist for Thailand and Vietnam at Standard Chartered Bank, commented.

In its update earlier this week, the Asian Development Bank revised down Vietnam’s economic growth forecast to 5.8% in 2023 and 6% in 2024, from respective 6.5% and 6.8% forecast in April. However, the projection for 2023 is the highest in Southeast Asia.