Vietnam's Q3 GDP forecast to moderate, Sept inflation likely slows: StanChart

Vietnam’s Q3/2024 GDP growth is forecast to have moderated to 5.1% year-on-year, slowing from 6.9% in Q2, Standard Chartered Bank says in its recent macro-economic update.

The bank’s economists expect retail sales growth to have eased to 5.2% year-on-year in September from 7.9% in August and export growth slowed to 6.2% year-on-year versus 14.5% a month earlier.

Electronics exports may have continued to improve on a year-to-date basis. Imports and industrial production last month likely grew 4% and 4.2% year-on-year from 12.4% and 9.5%, respectively.

The monthly trade surplus may have moderated to $2.5 billion from $4.5 billion in August. Vietnam has posted several months of surpluses this year and the external sector has stayed relatively solid, the economists said.

They, however, did not give an estimate for the impact of super typhoon Yagi, which made a land fall in Vietnam on September 7 and caused severe damages to the northern region, including several economic and industrial hubs.

Inflation is estimated to have dipped to 2.7% year-on-year in September from 3.5% in August. This would mark the second straight month of below 4% year-on-year inflation.

Higher prices for education, housing and construction materials, health care, food and transport have kept inflation above 4% until recently and could remain a source of upward pressure in the coming months, said the bank’s economists.

Tim Leelahaphan, an economist for Thailand and Vietnam at Standard Chartered Bank, said: "Credit growth has been subdued (7.4% year to date as of September 17, versus an average of 9.0% for the comparable period in 2013-23)."

"We now see a risk to our call for a 50-basis point interest rate hike in Q4/2024 given recent lower inflation, VND appreciation in Q3, and the expected economic moderation," he added.

The Singapore-based ASEAN+3 Macroeconomic Research Office (AMRO) has been the latest international institution to revise down its forecast for Vietnam’s 2024 growth, from 6.3% in July to 6.2%.

Late last month, United Overseas Bank (UOB) trimmed its GDP growth forecast for Vietnam by 0.1 percentage point to 5.9% this year due to typhoon Yagi.

Meanwhile, HSBC maintained its Vietnam GDP growth projection at 6.5% for both 2024 and 2025, despite temporary economic disruptions from Yagi. Similarly, the Asian Development Bank (ADB) kept its economic growth project for Vietnam unchanged at 6% in 2024.

The International Monetary Fund (IMF) last month raised its Vietnam’s economic growth forecast to 6.1% in 2024, up from 5.8% in the April projection.