Bloomberg gives positive economic outlook for Viet Nam in 2024

The website Bloomberg.com of the US on January 8 cited analysts' opinions, saying that the State Bank of Viet Nam (SBV), among the first in Asia to lower borrowing costs in 2023, will likely keep its benchmark interest rate steady through next year as it tackles economic growth and inflation.

Bloomberg's latest survey shows that the refinancing interest rate, currently at 4.5 percent, is seen to stay on hold through 2025, despite a rebound in gross domestic product growth backed by strong exports.

The rate was cut thrice between April and June last year to 4.5 percent from a peak of 6 percent. In a previous survey, economists had expected a further 50 basis points of cuts during January-March.

Analysts also raised their headline inflation forecasts for 2024, expecting price gains at 3.6 percent this quarter and 4.05 percent in the next (up from 2.9 percent and 3.3 percent in the first quarter of 2023 and the second quarter of 2023, respectively).

Besides, they expect the annual inflation to average a faster 3.5 percent this year from 3 percent earlier before easing to 3.2 percent in 2025. The 2024 level is still below the government's 4-4.5 percent target.

According to Bloomberg, the SBV will likely keep the policy interest rate unchanged in the coming time. This means that the heavy lifting of returning economic growth to above 6 percent by attracting investors and encouraging spending - will be left to the government.

According to Bloomberg's survey, the Vietnamese economy is likely to grow 6.3 percent in the first quarter and 6.5 percent in April-June. Viet Nam's GDP growth is forecast at 6 percent for this year and 6.4 percent next year.

Han Teng Chua, an economist at DBS Bank Ltd, said Viet Nam's economy has been recovering, adding that foreign direct investment will likely remain forthcoming. Viet Nam stays attractive over the coming years as companies diversify and derisk their supply chains by expanding into Viet Nam.

Competitive wage costs, a vast network of trade agreements and a supportive business environment are critical advantages for the Vietnamese economy.