Standard Chartered revises 2023 growth forecast down to 6.5%

In its latest macro-economic update on Vietnam, Standard Chartered Bank lowered the country’s 2023 GDP growth forecast to 6.5 per cent from the previous 7.2 per cent and became more cautious on the external front.

April macro indicators showed moderations. Exports declined 17.1 per cent year-on-year, imports fell 20.5 per cent, and industrial production barely rose. The trade surplus increased to $1.5 billion from $700 million in March.

In the first four months of the year, exports fell 11.8 per cent year-on-year and imports 15.4 per cent, with a trade surplus of $6.4 billion. Inflation was 2.8 per cent in April; easing for a third month in a row and down from 4.9 per cent in January, while core inflation was 4.6 per cent as retail sales saw robust growth of 11.5 per cent. Disbursed FDI in the opening four months totaled $5.9 billion, down 1.2 per cent year-on-year, while committed FDI was $8.9 billion, down 17.9 per cent.

“The significant import contraction points to slowing economic activity given Vietnam’s import-intensive nature, despite still-strong domestic consumption,” said Mr. Tim Leelahaphan, Economist for Thailand and Vietnam at Standard Chartered Bank.

Standard Chartered also forecast that the State Bank of Vietnam (SBV) will make another 50 basis point cut in the refinancing rate to 5 per cent by the end of the second quarter, followed by rates being on hold until end-2025. However, it sees upside risk to this rate forecast, especially towards year-end, as the SBV may focus more on financial stability than growth.

Mr. Leelahaphan also noted that the SBV has shifted to a pro-recovery stance since the start of the year. In addition to cutting rates, it is aiding businesses facing difficulties by giving them more time to address liquidity shortages. In April, it allowed easier loan terms, including delaying loan repayments by up to 12 months and providing rate waivers. “The property market may need further liquidity support, as measures so far appear to have only reduced short-term repayment pressure,” he said.