Wide open momentum, GDP growth in the fourth quarter may accelerate to 7.0%

After a slow recovery in the third quarter, Mr. Dinh Quang Hinh - Head of Macro and Market Strategy at VNDIRECT Securities - expects that Vietnam's economic recovery will accelerate further in the fourth quarter.

The main support will come from expansionary fiscal policy. Lower lending rates will help improve private investment and domestic consumption. The recovery in manufacturing will accelerate thanks to a rebound in export orders amid falling inventories and easing inflationary pressures in developed markets. Finally, the low base for the same period in 2022.

"We forecast Vietnam's GDP to grow 7.0% year-on-year in Q4/2023, a significant improvement from the 5.3% increase in the previous quarter. The industry and construction sector could improve its growth rate to 8.2-8.7% year-on-year in Q3/2023 thanks to improved production and export activities as well as strong public investment disbursement. I expect the service sector to grow 6.5-7.0% year-on-year, while the agriculture, forestry and fishery sector is forecast to grow 3.4-3.6% year-on-year," Hinh predicted.

Despite expectations of a clearer recovery in the fourth quarter, VNDIRECT experts have lowered their 2023 GDP growth forecast in the base scenario to 5.0% from the previous forecast of 5.5%. This is mainly due to lower-than-expected results in the first nine months of 2023.

The economic recovery process will accelerate further in the last quarter of 2023. Photo: VNDIRECT

Experts from KBSV Securities expect that positive signs of the macro economy will return in the last quarter of 2023. The main driving force comes from the recovery of export activities leading to growth in industrial production; the Government accelerates the disbursement of investment capital, FDI disbursement and the recovery of domestic consumption thanks to stimulus policies.

Conversely, renewed inflationary and exchange rate pressures are forcing the State Bank of Vietnam to be more cautious in its monetary policy. In addition, the domestic real estate market still shows no signs of recovery, posing risk factors that are hindering GDP growth.

"The lag in operating policies is still a factor supporting the macro economy in the coming period. However, concerns about exchange rate pressure and inflation may cause the macro environment to fluctuate in an unfavorable direction in the fourth quarter of 2023 and the first half of 2024" - KBSV commented.

Source