Standard Chartered forecasts Vietnam's 2024 GDP growth at 6.7%

Standard Chartered Bank expects Vietnam to have a robust GDP growth of 6.7% in 2024 (6.2% and 6.9% in the first half and second half of the year, respectively).

“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.

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 lacklustre; 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 behaviour 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 US dollar strength abates.