The forecast is highlighted in the bank’s recently published global research report on Vietnam titled “Vietnam – stronger but not easier.”

“Vietnam continues to offer a promising medium-term outlook. To maintain rapid growth and competitiveness, Vietnam needs to upgrade infrastructure and prepare to lower carbon emissions,” said Tim Leelahaphan, Economist for Thailand and Vietnam, Standard Chartered.

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Standard Chartered Bank expects Vietnam to have a robust GDP growth of 6.7% in 2024.

According to Standard Chartered’s economist, retail sales and industrial production have stayed robust despite the recent moderation. Exports and imports are starting to recover, though electronics-related trade remains tentative. The FDI recovery remains lackluster; a stronger recovery in FDI flow would require faster GDP growth. Headwinds to global trade pose a key risk.

Given re-emerging inflation concerns, inflation is anticipated to pick up to 5.5% in 2024 from 3.3% in 2023. Standard Chartered Bank forecasts monetary loosening has likely ended, given Vietnam’s economic recovery starting to gain momentum. The bank expects rates to stay on hold despite a possibility of another rate cut. Refinancing rate is expected to stay on hold at 4.5 % until end-Q3-2024, before a 50bps hike in Q4.

“We expect the central bank to strike a delicate policy balance between supporting the economy recovery and combating rising inflation and currency weakness. Inflation and a wide income-spending gap may result in a search-for-yield behavior and financial instability risks,” Tim said.

He believes the Vietnamese dong continues to face headwinds, with a mild VND appreciation, targeting 24,000 by end-2024. Forex reserves are forecasted to be rebuilt when U.S. dollar strength abates.

Source: VNA