TPO - Based on the strong momentum that will continue from 2024 combined with consideration of the risks and negative impacts from upcoming trade conflicts from the new US President, UOB Bank raises Vietnam's GDP growth forecast for 2025 to 7%.
TPO - Based on the strong momentum that will continue from 2024 combined with consideration of the risks and negative impacts from upcoming trade conflicts from the new US President, UOB Bank raises Vietnam's GDP growth forecast for 2025 to 7%.
Increased evenly across industries
On January 9, UOB Bank (Singapore) released the report “Vietnam Economic Outlook 2025”. According to UOB, Vietnam’s GDP continued to grow strongly in the fourth quarter of 2024, reaching 7.55% year-on-year. This figure is much higher than the market average forecast of 6.7% and UOB’s forecast of 5.2%.
Quarterly growth rate for 2023-2024. |
Thus, Vietnam's economy grew by 7.09% in 2024 compared to 5.1% in 2023, surpassing the general market forecast of 6.7% and the official target of 6.5%. This is the best growth rate since the recovery from COVID-19 in 2022 (8.1%). Of which, the industrial production and service sectors have been the main drivers since the growth trend began to accelerate in mid-2023 and contributed 35% and 48%, respectively, to the 7.55% growth in Q4/2024.
Accelerating foreign trade is the main reason for Vietnam's strong growth. Exports have increased in the past 10 months, with December up 12.8% year-on-year, and full-year growth of 14%. Imports are expected to rise 16.1% in 2024, with a trade surplus of about $23.9 billion, the second largest after a record high of $28.4 billion in 2023.
“The National Assembly has set a growth target of 6.5-7.0% for 2025, while Prime Minister Pham Minh Chinh has recently called for at least 8% growth, supported by faster public investment disbursement to boost infrastructure development and attract more investment. Given the fiscal discipline approach and how public investment has been disbursed to date, the 8% target seems ambitious but there is still room for improvement,” said UOB.
UOB forecasts that Vietnam's GDP in 2025 will reach about 7%. |
According to UOB experts, based on the strong momentum continuing from 2024 combined with consideration of risks and adverse impacts from upcoming trade conflicts from the new US administration, UOB raised Vietnam's GDP growth forecast in 2025 to 7%.
“We expect positive developments from domestic drivers such as manufacturing, consumer spending and tourist arrivals to contribute to activity, especially in the first half of the year,” the UOB report said.
What will the exchange rate be?
With headline and core inflation remaining below the official target of 4.5% in 2024, this has opened the door for the SBV to ease its policy stance. However, the exchange rate is now another consideration for the SBV and it is likely to keep its policy rate unchanged to counter depreciation pressure on the local currency.
“Given the uncertainty surrounding the US Federal Reserve’s policy rate adjustment cycle and geopolitical and trade tensions following the US President’s inauguration, we expect the SBV to keep its policy rate unchanged for now, with the refinancing rate held at 4.5%,” said a UOB expert.
UOB Bank forecasts that VND will likely continue to decrease against USD. |
The VND has weakened against the USD, along with other Asian currencies, since the end of the third quarter of 2024 amid the tense US presidential election. The VND ended 2024 at a record low of 25,485/USD, down 5% for the year and the third consecutive year of decline.
According to UOB, the market has revised its forecasts to fewer Fed rate cuts in a Trump 2.0 term, meaning the strength of the USD will continue to be supported. The VND is likely to be affected by Trump's tariff policies and the trend of the CNY.
With external disadvantages unlikely to disappear in the short term, UOB Bank forecasts that VND will likely continue to depreciate against USD. UOB forecasts the USD/VND exchange rate at 25,800 in Q1/2025, 26,000 in Q2/2025, 26,200 in Q3/2025 and 26,000 in Q4/2025.
Source: https://tienphong.vn/du-bao-moi-nhat-ve-kinh-te-viet-nam-nam-nay-post1708170.tpo
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