The Standard Charter confirms Vietnam's GDP growth at 6.7% in 2024.

Standard Chartered Bank confirms its GDP growth forecast for Vietnam at 6.7 percent for 2024. The bank has lowered its GDP growth forecast for the country in 2023 from 5.4 percent to 5 percent. The revised forecast will require a growth rate of 7 percent in the fourth quarter, which may be a challenging task.

According to the report, macro indicators show preliminary improvement; trade has not yet signaled a clear rise in production. However, internal recovery continues and is likely to strengthen further, thanks to the growth in retail sales.

Construction and the accommodation sector continue to show strong growth since the beginning of the year; production has started to expand. The external forecast is improving, with the current account balance rising to 3.5 percent of GDP in 2024, up from 2.0 percent in 2023.

The inflation forecast for 2023 has been revised upward to 3.4 percent annually, up from the previous 2.8 percent. The inflation rate in the fourth quarter is projected to be 4.3 percent (instead of 2.7 percent) and is likely to continue rising next year. Inflation may lead to a search for yield and an increase in financial instability risks.

"The medium-term prospects remain promising due to Vietnam's economic openness and stability. To revive the inflow of foreign investments, the country needs to resume rapid GDP growth and develop its infrastructure," said Tim Lilaphan, an economist from Thailand and Vietnam at Standard Chartered Bank.

“The real estate market may require additional financial support, as the measures taken so far have only alleviated short-term pressure on payments. Low interest rates, new projects, and improved buyer sentiment could help the market,” said Tim Lilaphan.

Earlier, the Global Economics & Market Research Unit of United Overseas Bank (UOB) lowered its GDP growth forecast for Vietnam for the entire year to 5 percent from the previous 5.2 percent.

Michael Kokalari, a current financial analyst (CFA) and chief economist at VinaCapital, stated that Vietnam's GDP is likely to grow by less than 5 percent in 2023 due to reduced demand for "Made in Vietnam" products.

“We expect Vietnam's GDP growth to recover to 6.5 percent next year due to the revival of exports, which will, in turn, be accompanied by a recovery in production in the country, rising from flat growth in 2023 to 8-9 percent in 2024, compared to the 12 percent average annual growth of the sector before the COVID-19 pandemic,” he explained.

"Our optimism regarding Vietnam's GDP recovery in 2024 is based on an analysis of the reasons for the sector's problems in 2023, which were caused by excess inventory of goods at American retail and other consumer companies in 2022," he added.

Inventories increased by more than 20 percent year-on-year at the end of 2022 due to excess orders during supply chain disruptions caused by the COVID-19 pandemic in 2021 and due to expectations of a consumer spending boom after the pandemic, which did not materialize as retail and other consumer companies had anticipated.

Instead of buying more goods after the restrictions were lifted, consumers spent their money on services like travel and dining. As a result, American companies dealt with excess inventory throughout 2023, and this factor significantly impacted Vietnam's exports and manufacturing this year. However, a wealth of anecdotal and high-frequency economic information from the U.S. and Vietnam suggests that this situation is coming to an end, which provides a basis for believing that orders and production in Vietnam's factories are now recovering.