Illustrative image (Photo: VNA) The forecast is highlighted in the bank’s recently published global researchreport on Vietnam, titled “Vietnam – Still enjoying high-growth status”.
“We still have a conviction on Vietnam’s high growth potential over the mediumterm,” said Tim Leelahaphan, Economist for Thailand and Vietnam, StandardChartered. “While macro indicators moderated somewhat in Quarter 4 2022, theyremain largely robust. Retail sales posted solid growth in the second half of2022, implying improved domestic activity.”
According to Standard Chartered’s economists, trade balance has tentativelyimproved; exports may face global headwinds; imports are at risk of reversal.FDI disbursements have continued to increase, but the outlook hinges on theglobal economy. Inflation may pose a threat to Vietnam’s continued recovery.
Inflation is anticipated to rise throughout 2023, potentially reaching 6% inthe final months of the year and averaging 5.5% in both 2023 and 2024 (from 3.2%in 2022). Vietnam’s fiscal deficit may persist and be a source of inflation.
Standard Chartered Bank expects the State Bank of Vietnam (SBV) to hike ratesby another one% in Quarter 1 2023 and to stay on hold through end-2024 as itshifts to a tightening stance with a view to maintaining stability.
“We expect the central bank to stay vigilant against inflation, a weakeningVietnamese dong, and financialinstability arising from risky loans in the real-estate sector. The SBV mayprefer a relatively strong Vietnamese dong,as long as it does not harm the country’s trade competitiveness,” said TimLeelahaphan, Economist for Thailand and Vietnam, Standard Chartered.
According to Tim, the Vietnamese dong hasrecovered sharply in recent weeks, however, the pace of Vietnamese dong appreciation is likely to slowdown, as several headwinds persist. The replenishment of FX reserves is likelyto be a key priority for the central bank. An improving Current Accountbackdrop and tourism recovery is likely to be supportive to the Vietnamese dong. The USD/VND exchange rate is forecastat 23,400 by end-2023 and 23,000 by end-2024./.
VNA
