Standard Chartered forecasts Vietnam's GDP to grow 6.7% in 2025

The US dollar is expected to strengthen in the second half of 2025 as tariffs and fiscal measures under President Trump's second term fade, a Standard Chartered expert said.

Standard Chartered forecasts Vietnam's GDP to grow 6.7% in 2025.

On December 12, 2024, Standard Chartered Bank released its latest economic update on Vietnam, predicting that the USD will strengthen in 2025 but weaken in the early part of the year. The bank also forecasts that Vietnam's GDP will grow strongly by 6.7% in 2025, with growth in the first half reaching 7.5% compared to the same period last year and at 6.1% in the second half.

Standard Chartered experts said the USD is expected to strengthen strongly in the second half of 2025 when the tariff policies and fiscal measures under President Trump's second term (Trump 2.0) are clarified and implemented. Prolonged inflation and structural factors such as economic performance will impact the foreign exchange market, with the main driver being the exchange rate differential.

In the long term, the sustainability of macro stimulus measures will affect the strength of the US dollar. Investors at home and abroad may switch to assets that can hedge against inflation if the uncertainty persists.

According to Standard Chartered experts, the USD may face a period of weakness in early 2025 due to continued Fed rate cuts and uncertainty in policy implementation. The lingering effects of rate hikes and a stronger USD from October 2024 could put further pressure on the currency.

The recent Fed rate cut is expected to support Asian currencies, including the Vietnamese dong. However, better-than-expected US economic data has added pressure to the Asian foreign exchange market. Factors such as trade policy uncertainty and possible inflationary measures under President Trump could undermine the stability of monetary policy in the region.

According to Standard Chartered economists, Vietnam is still achieving good growth. Exports increased by 14.9% year-on-year in the first 10 months of 2024, while imports increased by 16.8%; with the electronics import-export sector continuing to recover. Solid growth in the manufacturing sector and appropriate monetary policy have also contributed to the economic recovery since the beginning of the year.

Foreign investment continued to grow, as evidenced by strong FDI inflows. Disbursed FDI increased by 8.8% year-on-year while committed FDI increased by 1.9% over the same period. The manufacturing sector accounted for 62.6% of total committed FDI during the period, while the real estate sector accounted for 19.0%, an increase from the same period last year.

“We expect the State Bank of Vietnam to raise interest rates by another 50 basis points in the second quarter of 2025,” said Tim Leelahaphan, economist for Thailand and Vietnam at Standard Chartered. “The government’s expectations of strong economic growth are supporting the current low interest rates. Inflation may pick up again starting from the second quarter of 2025. Therefore, we also expect interest rates to return to normal in the second quarter.”

According to Tim Leelahaphan, the Fed’s moves will be a key factor influencing the State Bank of Vietnam’s monetary policy decisions. Lower USD interest rates could help reduce capital outflows, while a sustained trade surplus and strong foreign exchange earnings from the tourism industry will support the VND, but low import reserves remain a challenge.

Standard Chartered forecasts that the Fed's interest rate cuts could lead to a weakening trend of the USD in the next few quarters, resulting in a USD/VND exchange rate of VND25,250 by the end of 2024 and VND25,450 in the second quarter of 2025./.

According to VNA

Source: https://baobinhduong.vn/standard-chartered-du-bao-gdp-cua-viet-nam-se-tang-truong-6-7-nam-2025-a337514.html