Standard Chartered lowers Vietnam’s 2024 growth forecast to 6%

UK bank Standard Chartered has revised its growth forecast for Vietnam in 2024 from 6.7% to 6%, citing slower-than-expected growth in the first quarter and challenges from global trade.

But the latest forecast is still an improvement compared to 5.0% growth in 2023.

Vietnam’s growth during the first three months of 2024 fell to 5.7% from 6.7% in the fourth quarter of 2023.

Growth in the second and third quarters is projected at 5.3% (down from 6.3%) and 6.0% (down from 7.2%), but the pace is expected to pick up in the fourth quarter to 6.7%.

Standard Chartered also cut its 2024 inflation forecast from 5.5% to 4.3% due to lower-than-expected inflation in the first quarter.

According to the UK bank, the interest rate will be maintained at 4.5% until the end of the third quarter and could rise by 50 basis points in the fourth quarter, owing to growth-driven inflation.

Trade – Vietnam’s important source of growth and investment – will also have to face challenges in the short and long run. However, the Vietnamese economy remains on the path of recovery despite risks.

Retail sales were robust in the first quarter.

Tim Leelahaphan, a Standard Chartered economist, said that Vietnam is improving its position in global supply chains and that foreign investment continues to be attracted thanks to a favourable investment climate and the impacts of US-China trade relations.

He added that with economic recovery gaining momentum, there will be less need for monetary policy support.