Vietnam GDP growth likely 6.62% in 2023: UOB

Singapore's United Overseas Bank (UOB) predicted Vietnam's GDP growth for 2023 at 6.62%, slightly above the target of 6.5% set by the country's National Assembly.

Strong growth in 2022 showed Vietnam’s resilience and ability to recover from damages caused by the Covid-19 pandemic, due to its diversified economic sectors in manufacturing and services. However, overall growth momentum is likely to be moderate further in 2023, the Singaporean bank wrote in a release on Tuesday.

UOB said policy tightening from major central banks weigh on external demand, particularly from the U.S. and Europe, which account for a 41% share of Vietnam’s exports. Besides, the State Bank of Vietnam (SBV) has also tightened its policy stance in response to inflation pressures and a weakened Vietnamese dong, although domestic demand is likely to take the growth leadership in 2023 with rising income and improved business prospects.

The bank added while the annual data, featuring a GDP growth of 8.02% in 2022, showed strong performances across the board, signs of moderating growth are apparent and concerning in detailed breakdown of the data, as manufacturing sector barely expanded while exports registered its second consecutive month of decline in December.

However, this was offset by strong performances of domestic sectors including retail and investment inflows.

While markets cheer a sooner-than-anticipated China reopening, Vietnam’s recovery trajectory is unlikely to be straightforward due to the massive surge of COVID-19 infections. Expected recessions in Western economies such as the U.S., the U.K. and the Euro-area are likely to add to these uncertainties.

UOB maintains its upward trajectory in the exchange rates, with forecasts of one U.S. dollar equivalent to VND25,200 in the first quarter (Q1) of 2023, VND25,400 in Q2/2023, VND25,600 in Q3/2023, and VND25,800 in Q4/2023.

Vietnam's economy expanded by 8.02% in 2022, much higher than the 2.58% recorded last year during the height of the pandemic, the General Statistics Office announced last week.

The National Assembly, the country's highest legislative body, last Novermber set a target of 6.5% GDP growth for 2023.

Vietnam’s economic growth is predicted to slow down to 5.8% in 2023, according to a recent report by HSBC. Standard Chartered Bank revised up its Vietnam GDP growth forecast to 7.2% for 2023 in an October report.