ADB forecasts Vietnam to grow 5.8% in 2023

The Asian Development Bank (ADB) has just released its Asian Development Outlook (ADO) report for July 2023, in which it lowered Vietnam's growth forecast in 2023 from 6.5% to 5.8%, and from 6.8% to 6.2% in 2024.

Weak external demand continues to weigh on industrial production and manufacturing, while domestic conditions are expected to improve. Vietnam’s inflation is forecast to slow to 4% in 2023 and 2024, according to ADB.

Previously, some organizations also lowered their forecasts for Vietnam's economic growth this year after the General Statistics Office announced that GDP in the second quarter and the first half of 2023 grew at low levels, at 4.14% and 3.72%, respectively.

ADB lowers Vietnam's growth forecast.

Some domestic and foreign organizations believe that Vietnam's growth target of 6.5% this year is a big challenge.

BIDV Training and Research Institute forecasts GDP growth for the whole year of 2023 (baseline scenario) at about 5-5.5% (lower than the forecast of 5.5-6% in March).

The Asia- Pacific region is forecast to grow by 4.8% in 2023, as robust domestic demand continues to support the region’s recovery, according to the ADB. Inflation is expected to continue to decline, approaching pre-pandemic levels as fuel and food prices decline.

Inflation in developing Asia is forecast at 3.6% this year, down from the 4.2% forecast in April 2023. Meanwhile, the inflation forecast for 2024 has been raised to 3.4% from the previous estimate of 3.3%.

The ADB forecasts China’s economy will grow 5% this year, unchanged from its April forecast, amid strong domestic demand in the services sector. China’s reopening is seen by the ADB as boosting regional growth.

However, demand for electronics and other manufactured goods exports from developing Asia is slowing, as tight monetary policy leads to a slowdown in economic activity in major developed economies.

ADB Chief Economist Albert Park said Asia and the Pacific continues to recover from the pandemic at a steady pace, with domestic demand and services activity driving growth, while many economies are also benefiting from a strong recovery in tourism.

However, according to this person, industrial activities and exports remain weak, leading to a decline in global growth and demand prospects next year.

ADB kept its growth forecasts unchanged for most subregions in Asia and the Pacific. The exceptions include Southeast Asia, where the outlook was lowered to 4.6% this year and 4.9% next year, from April estimates of 4.7% and 5.0%, respectively.

The forecast for the Caucasus and Central Asia subregion is revised down slightly, from 4.4% to 4.3% for 2023 and from 4.6% to 4.4% in 2024.

Low GDP growth, deep interest rate reduction: What is the target for the economy and stocks? The stock market fluctuated strongly when profit-taking pressure increased. However, there were signs that cash flow was not withdrawn and foreign investors were actively buying. The real estate market showed signs of warming up along with the stability of the macro economy.

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