Vietnam’s Q1 GDP to moderate amid rising inflation: Standard Chartered

Standard Chartered Bank forecasts Vietnam’s Q1 GDP growth will moderate to a still-strong 6.1% year-on-year from 6.7% in Q4.

In its recent global research report titled “Vietnam – Q1 GDP to moderate amid rising inflation”, the bank maintains the 2024 GDP growth forecast at 6.7%, growth accelerating from 6.2% year-on-year in the first half of the year to 6.9% in the second half of the year.

According to the international bank, March data is likely to show a recovery after Tet (Lunar New Year), supported by retail sales. The bank expects retail sales growth to rise to 9.2% year-on-year in March; export growth is likely to rebound to 5.2% year-on-year; import growth at 5.0% while the trade surplus may narrow to 0.8 billion USD.

Inflation may rise further to 4.2% in March (from 4.0% in February). Education, housing (construction materials) and food prices have driven inflation recently. A stronger recovery in FDI inflows would require faster GDP growth.

Tim Leelahaphan, Economist for Thailand and Vietnam, Standard Chartered Bank, said: “Despite the likely Q1 slowdown, we think Vietnam’s recovery remains intact. However, we are cautious on the H1 growth outlook due to headwinds to global trade.”

The bank expects the State Bank of Vietnam to keep the refinancing rate on hold at 4.5% through end Q3-2024 and hike by 50bps in Q4, given concerns about growth-driven inflation.

TB (according to VNA)