Vietnam’s economy to grow 6.1% in Q1: Standard Chartered

Vietnam’s GDP is expected to expand 6.1% year-on-year in the first quarter of 2024, much higher than a 3.32% growth rate in Q1/2023 but lower than the 6.72% posted in Q4/2023, according to Standard Chartered Bank.

In its recent global research report titled “Vietnam – Q1 GDP to moderate amid rising inflation”, the bank retains its 2024 GDP growth forecast at 6.7%, with growth accelerating from 6.2% year-on-year in the first half to 6.9% in the latter half.

Vietnam’s March data is likely to show a recovery after the Lunar New Year holiday (Tet), supported by retail sales. The bank expects retail sales growth to pick up by 9.2% year-on-year in March.

Export growth is likely to rebound to 5.2% and imports are predicted to grow 5.0%, while the trade surplus may narrow to $0.8 billion.

Inflation may rise further to 4.2% year-on-year in March (from 4.0% in February). Education, housing (construction materials) and food prices have driven inflation recently.

“A stronger recovery in FDI inflows would require faster GDP growth,” the bank said.

The Vietnamese government is due to release Q1 data later this week.

Tim Leelahaphan, economist for Thailand and Vietnam, Standard Chartered Bank, said: “Despite the likely Q1 slowdown, we think Vietnam’s recovery remains intact. However, we are cautious on the H1 growth outlook due to headwinds to global trade.”

The bank expects the State Bank of Vietnam (SBV), the country’s banking regulator, to keep the refinancing rate on hold at 4.5% through end-Q3/2024 and hike by 50 basis points in Q4, given concerns about growth-driven inflation.

Vietnam ended 2023 with GDP rising 5.05% after a year full of global headwinds.

HSBC researchers in January reckoned that Vietnam was on track for a recovery, likely returning to its trend growth of 6% in 2024. They expected inflation to remain benign in 2024, with a forecast of 3.4%, well below the new inflation target of 4-4.5%.

Also in January, the World Bank trimmed Vietnam’s GDP growth forecast to 5.5% in 2024 and 6% in 2025, down 0.7 and 0.5 percentage points versus its forecasts in June 2023.

Meanwhile, Vietnam-focused fund manager VinaCapital forecast the country’s GDP growth to accelerate to 6-6.5% in 2024, driven by a recovery in exports. This forecast is similar to the United Nations' projections in its World Economic Situation Prospects 2024 report.