Standard Chartered raises Vietnam’s growth forecast to 7.5%

Standard Chartered Bank raised Vietnam’s GDP growth forecast for 2022 to 7.5%, higher than its August forecast of 6.7%.

The prediction is based on a 13.7% surge in the third quarter. It said Vietnam’s Q4 growth is anticipated at 4%.

The U.K. lender predicts Vietnam’s GDP could grow by 7.2% in 2023, up 0.2% compared to the August forecast.

Meanwhile, the U.K.-based bank lowered its inflation forecast for this year to 3.3% from 4.2%. It expected an acceleration in Q4 to 5% from 3.3% in Q3.

"Inflation has been largely put under control and price pressures may increase in the rest of 2022 and in 2023," the lender noted.

Tim Leelahaphan, economist for Thailand and Vietnam at Standard Chartered Bank, said inflation is a threat to Vietnam’s continued recovery.

Standard Chartered’s economists expect the State Bank of Vietnam to continue tightening monetary policy and forecast a 50bps [basis points] hike in the refinancing rate each in Q4 2022 and Q1 2023, taking the rate to 6%, following a 100bps hike to 5% on Sept. 22.

Leelahaphan added: "We see a risk of SBV raising rates more than we expect if inflation accelerates and the Vietnamese dong weakening more than we forecast as Fed maintains a relatively hawkish stance."

The bank forecasts U.S. dollar-Vietnamese dong rate at 24,200 by the end of 2022 and at 24,000 for end-Q1-2023 and declining towards 23,400 by end-2023.

In its latest report in October, the World Bank predicts Vietnam’s GDP could grow by 7.2% in 2022, the highest in East Asia and the Pacific region. The surge is higher than its April forecast to 5.3%.

In 2023, the bank forecasts Vietnam’s economy would grow at 6.7%. This growth is in line with the August forecast.