Standard Chartered Bank has forecast a rebound for Vietnam’s economy in the second half of this year, increasing 7.0 per cent year-on-year after coming in at 3.7 per cent in the first half.

According to the bank’s recent macro-economic updates on Vietnam, sustained month-on-month improvements in trade data since the start of this year point to a clearer recovery in the second half.

“The medium-term outlook remains promising given Vietnam’s economic openness and stability,” said Mr. Tim Leelahaphan, Economist for Thailand and Vietnam, Standard Chartered Bank. “A continued recovery in tourist arrivals should shore up the services balance.”

Despite macro-economic indicators improving slightly, they remain relatively weak. Trade contraction is still quite deep, resulting in muted manufacturing and economic activity. Vietnam’s trade surplus rose in the second quarter but exports contracted year-on-year. Overall, Vietnam’s first-half trade surplus exceeded 2022 levels, as softer imports amid lower energy prices more than offset sluggish export growth.

Standard Chartered has lowered its 2023 GDP growth forecast to 5.4 per cent from its previous 6.5 per cent, and is more cautious on weaker-than-expected data year-to-date and a gloomier global outlook.

According to economists, risks to the VND FX outlook are evenly balanced. The bank forecasts a USD-VND rates of 23,400 from end-2023 through to the third quarter of 2024. Precautionary reserve rebuilding should cap the VND upside in the near term, the US Fed increasing interest rates, and a weaker Chinese Yuan (CNY) will also weigh on the VND.