Standard Chartered lowers Vietnam growth forecast

Standard Chartered has just adjusted its growth forecast for Vietnam from 5.4% to 5% compared to 1 month ago.

In its Economic Update released on October 24, Standard Chartered said the revised forecast reflects a lower-than-expected economic performance year-to-date and a bleak global economic outlook.

According to Standard Chartered, to achieve 5% growth for the whole year, Vietnam must grow 7% in the fourth quarter. This level is considered a challenge.

"Macroeconomic indicators have temporarily improved, trade has yet to show clear signs of production recovery," the bank said.

However, Standard Chartered also acknowledged that domestic recovery signals continue and are likely to increase further thanks to retail sales. The construction and accommodation sectors have maintained strong growth since the beginning of the year, while manufacturing has begun to expand. External prospects are improving with a rising current account surplus.

Reporting to the National Assembly on October 23, Prime Minister Pham Minh Chinh said that Vietnam's economy is being affected by unfavorable external factors and internal limitations that have lasted for many years. The competitiveness and resilience of the economy are still limited. Accordingly, this year's GDP is expected to increase by over 5%, lower than the National Assembly's target of 6.5%. Inflation is about 3.5-4%.

Mr. Tim Leelahaphan, economist for Thailand and Vietnam, Standard Chartered Bank, said that in the medium term, Vietnam's economic prospects remain promising thanks to its openness and stability. However, Vietnam needs to quickly restore GDP growth and develop infrastructure to attract FDI.

He also acknowledged that Vietnam’s real estate market may need further liquidity support as measures so far have only helped ease short-term debt repayment pressures. “Low interest rates, newly approved projects and improved buyer sentiment could support the market,” he said.

Standard Chartered also revised its inflation rate to 3.4% this year from 2.8% previously. The fourth quarter inflation rate is forecast at 4.3% (previously 2.7%) and is likely to rise further next year. This is due to rising costsof education , housing, food, and transportation.

The consequences of rising inflation could lead to a loss of profit and increased risk of financial instability.

Vnexpress.net