Standard Chartered revises down Vietnam’s GDP growth forecast in 2024 to 6%

Containers being loaded at Cat Lai port in HCM City. (Photo: VNA)

Standard Chartered Bank has lowered Vietnam’s GDP growth forecast in 2024 to 6% from the previous 6.7% due to lower-than-expected Q1 growth and global trade headwinds.

However, it is still an improvement from 5% in 2023. The country’s Q1 GDP growth moderated to 5.7% (from 6.7% in Q4-2023). The bank lowered Q2 year-on-year growth forecast to 5.3% (from 6.3%) and Q3 to 6%. But Q4 growth is expected to be recovered to 6.7%.

According to Standard Chartered’s economist in its recent macro-economic updates about Vietnam, trade, a key source of growth and investment for Vietnam also faces short and long term challenges. However, Vietnam’s recovery remains intact despite risks. Retail sales growth was still robust in Q1.

Standard Chartered also lowers 2024 inflation forecast to 4.3% from 5.5 % to reflect lower-than-expected Q1 inflation. The bank expects rates to stay on hold at 4.5% until end-Q3 and could be raised by 50 bps in Q4 in response to growth-driven inflation.

“Vietnam is improving its position in global supply chains. Foreign investment continues to be attracted by a favourable investment environment and potential ramp-up of US-China trade tensions,” said Tim Leelahaphan, Economist for Thailand and Vietnam, Standard Chartered. “With economic recovery starting to gain momentum, we think there will be less need to provide monetary policy support”, he added.

According to Tim, there is a balanced view on the Vietnamese given improvements on the external front and reserve rebuilding. Strong export growth provides some support for the currency. Imports point to further gains. The bank forecasts a current account surplus of 3.5% GDP in 2024./.