StanChart lowers growth forecast

Standard Chartered Bank has lowered Vietnam’s 2023 GDP growth forecast to 6.5% from the previous 7.2%, as the bank has turned more cautious on the external front and the macro-indicators in the first four months showed moderation. According to its recent macro-economic update on Vietnam, in the first four months of the year, exports fell 11.8% year-on-year and imports were down 15.4% year-on-year. Inflation was 2.8% in April, easing for the third month in a row and down from 4.9% in January, while core inflation rose 4.6%. Disbursed FDI in January-April totaled US$5.9 billion, down 1.2% year-on-year, while pledged FDI was US$8.9 billion, down 17.9%.

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

Standard Chartered forecast that the State Bank of Vietnam (SBV) will make another 50 basis point cut in the refinancing rate to 5% by the end of the second quarter, followed by rates on hold until end-2025.

Earlier, some international financial institutions have also cut their growth forecasts for Vietnam’s economy this year due to global economic slowdown, monetary tightening in developed countries, escalating commodity prices and geo-political upheavals.

The World Bank has lowered its growth forecast to 6.3% from 6.7%, and the International Monetary Fund to 5.8% from 6.2%.

The Asian Development Bank has projected a growth rate of 6.5%, the same as the Government’s target.

At a meeting of the National Assembly Standing Committee last week, Minister of Planning and Investment Nguyen Chi Dung expressed concern over the target, as the GDP growth in the first quarter was only 3.32%. He said to achieve the target, the growth in the following quarters must be very high, around 8%.