Standard Chartered forecasts Q2 GDP to moderate amid higher inflation

In its recent macro-economic updates about Việt Nam, Standard Chartered Bank forecasts the Việt Nam’s Q2 GDP growth at moderate to a still-strong 5.3 per cent year-on-year (from 5.7 per cent in Q1).

In its most recent macro-economic updates about Việt Nam, Standard Chartered Bank forecasts Việt Nam’s Q2 GDP growth to moderate to a still-strong 5.3 per cent year-on-year (from 5.7 per cent in Q1).

According to Standard Chartered’s economists, the bank expects retail sales growth to ease to 8.2 per cent year-on-year in June (from 9.5 per cent in May), export growth to ease to 14.2 per cent year-on-year in June (15.8 per cent year-on-year), and electronics exports to continue their year-to-date improvement.

Imports and industrial production are likely to grow 26.0 per cent year-on-year (29.9 per cent) and 5.2 per cent in June, respectively. Inflation may rise to 4.5 per cent year-on-year in June (from 4.4 per cent in May), marking a third straight month above 4 per cent. Education, housing and construction materials, health care and food have driven inflation recently. This trend may continue in the coming months.

Tim Leelahaphan, Economist for Thailand and Việt Nam, Standard Chartered Bank, said: “Despite the likely Q2 slowdown, we think Việt Nam’s recovery remains intact. However, economic challenges could persist in Q3 amid rising price pressures, FX weakness and soft global demand.”

The bank expects the State Bank of Việt Nam (SBV) to hike the refinancing rate by 50bps in Q4 in response to rising inflation. FX weakness supports the bank’s call for a hike in Q4, or possibly earlier.