Standard Chartered: Third quarter economy continues to recover

Standard Chartered forecasts Vietnam's third-quarter GDP growth at 5.1%, up from 4.1% in the second quarter.

Vietnam’s economy has shown signs of recovery since the second quarter, according to Standard Chartered. In the final month of the third quarter, the bank said, data may improve slightly compared to August thanks to retail sales.

Retail sales growth in September is expected to remain strong at 8.2% y/y; exports are forecast to fall by 6.2%; imports by 7%; industrial production growth to rise to 3.2%. The trade surplus could narrow to US$1.3 billion. Inflation could rise again to 3.2% y/y (August inflation was 3%).

Prices for education, housing and food have pushed up inflation recently, while pressure from the transport sector has eased. Vietnam welcomed about 7.8 million foreign tourists in the first eight months of 2023, close to its full-year target of 8 million visitors.

Standard Chartered noted that the economic recovery still needs to be monitored as trade activity remains depressed; manufacturing may remain subdued for some time and the outlook for FDI recovery remains unclear.

The easing of price pressures will allow policymakers to focus on growth, but renewed concerns about a return of inflation in the second half of the year could have an impact, said Tim Leelahaphan, economist for Thailand and Vietnam at Standard Chartered Bank.

“As the economy recovers, we will no longer need as much support from monetary policy,” he said.

The bank maintained its forecast for GDP growth for the whole year of 2023 at 5.4% - lower than the target set by the National Assembly and the Vietnamese Government (6.5%).

In fact, many domestic and international organizations have forecast that Vietnam's growth this year will fluctuate below 6%. For example, Fulbright School Vietnam forecasts about 5.5-5.9%; the Asian Development Bank (ADB) is 5.8% (from the previous 6.5%); the International Monetary Fund (IMF) and UOB Bank are 4.7% and 5.2% respectively, due to great pressure from a sharp decline in external aggregate demand, affecting exports.

Duc Minh

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