Việt Nam's economic growth may slow in H2, but outlook remains positive: UOB report

Manufacturing electronics components at Youngbag Vina company at Bình Xuyên Industrial Zone, Vĩnh Phúc Province. — VNA/VNS Photo

Việt Nam's economic growth might decelerate in the second half compared to that in the first half, with several supportive factors expected to sustain the overall growth outlook, according to the a report released by the Singaporean-based United Overseas Bank (UOB)'s Global Economics & Market Research Unit on Wednesday.

According to UOB experts, Việt Nam’s real GDP grew by 6.93 per cent year-on-year in Q2, continuing the momentum from the 5.87 per cent increase in Q1 and previous quarters. Overall, the economy expanded by 6.42 per cent in the first half, significantly outpacing the 3.84 per cent growth logged in the same period of last year.

The manufacturing and services sectors continued to drive most business activities, while foreign trade remained robust in Q2. The increase in semiconductor sales since mid-last year indicates that this momentum may persist for another 1-2 quarters.

The UOB maintained its growth forecast for Việt Nam at 6 per cent for this year, compared to the government's target range of 6-6.5 per cent.

Notably, the analysts said most foreign investors have a positive long-term outlook for Việt Nam. This is evidenced by the 13.1 per cent year-on-year increase to US$15.2 billion in registered foreign direct investment (FDI) in the first six months.

Regarding interest and exchange rates, the UOB’s report noted that the recent depreciation of the Vietnamese đồng against a strengthening US dollars and rising inflation may prompt the State Bank of Việt Nam to be cautious with any changes to policy rates. Considering the potential slowdown in growth in the latter half, the UOB projected that the central bank would maintain the refinancing rate at the current level of 4.5 per cent.