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 expecting a sharper recovery in the fourth quarter, experts from VNDIRECT lowered the 2023 GDP growth in the baseline scenario to 5.0% from the previous forecast of 5.5%. Mainly due to the lower-than-expected results of the first 9 months of 2023.

The economic recovery 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.

On the other hand, the return of inflation and exchange rate pressures has forced the State Bank to be more cautious in its management policies. In addition, the domestic real estate market has not shown signs of recovery, which are risk factors that are holding back 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