Standard Chartered Lowers Vietnam's 2024 Economic Growth Forecast to 6%

Standard Chartered Bank has revised its 2024 economic growth forecast for Vietnam downward to 6.0% from its previous estimate of 6.7%.

The bank cited lower-than-expected growth in the first quarter of 2024 and ongoing global trade headwinds as the primary reasons for the adjustment.

Vietnam's GDP growth in Q1 2024 stood at 5.7%, a decrease from the 6.7% recorded in Q4 2023. Standard Chartered also lowered its growth projections for Q2 and Q3 2024 to 5.3% and 6.0% respectively, while anticipating a recovery to 6.7% in Q4. Despite the downgrade, the 6.0% full-year forecast still represents an improvement from the 5.0% growth seen in 2023.

Why this matters: Vietnam's economic performance has significant implications for the Southeast Asian region and global trade. As a rapidly developing economy, Vietnam's growth trajectory influences investment decisions, supply chain strategies, and regional economic dynamics.

The bank's economists noted that trade and investment remain key drivers of growth for Vietnam, although the country faces both short-term and long-term challenges in these areas. However, they emphasized that Vietnam's recovery remains intact, supported by robust retail sales growth in the first quarter.

Standard Chartered also lowered its 2024 inflation forecast for Vietnam to 4.3% from 5.5%, reflecting lower-than-expected inflation in Q1. The bank expects interest rates to remain on hold at 4.5% until the end of Q3 2024, with a potential 50 basis point hike in Q4 in response to growth-driven inflationary pressures.

The economists highlighted Vietnam's improving position in global supply chains and its continued ability to attract foreign investment, driven by a favorable investment environment and the potential escalation of U.S.-China trade tensions. Standard Chartered forecasts a current account surplus of 3.5% of GDP for Vietnam in 2024.

"Vietnam is improving its position in global supply chains and continues to attract foreign investment," stated Tim Leelahaphan, Standard Chartered's economist for Vietnam. He added that the bank maintains a balanced view on the Vietnamese dong, given improvements in the external sector and ongoing reserve rebuilding

Key Takeaways

• Standard Chartered revised Vietnam's 2024 GDP growth forecast to 6.0% from 6.7%.
• Q1 2024 GDP growth was 5.7%, down from 6.7% in Q4 2023.
• Vietnam's economic performance impacts Southeast Asia and global trade.
• Trade and investment remain key growth drivers, despite short-term challenges.
• Standard Chartered lowered Vietnam's 2024 inflation forecast to 4.3% from 5.5%.