Standard Chartered Bank Forecasts Vietnam’s Q3 GDP Growth at 10.8%

Standard Chartered Bank forecasts Vietnam’s GDP growth at 10.8% and 3.9% for Q3 and Q4 2022, respectively, taking full-year growth to 6.7%. High global oil prices may have negative consequences for the economy.

“The economic recovery has shown signs of broadening; macroeconomic indicators likely continued to recover in July. The recovery may accelerate markedly in H2, particularly as tourism reopens after a two-year closure.” said Tim Leelahaphan, Economist for Thailand and Vietnam, Standard Chartered.

Standard Chartered economists expect the State Bank of Vietnam (SBV) to keep the policy rate on hold at 4.0% in 2022 to support economic growth and businesses, despite rising inflation.

Retail sales growth has likely continued to improve strongly to 30.2% y/y in July (from 27.3% in June). Export, import and industrial production growth in July is expected to pick up to 22.2%, 20.0% and 15.2% (from 20.0%, 16.3% and 11.5% in June), respectively. A trade surplus remains elusive; another deficit is anticipated this month.

“We see inflation jumping to 3.6% y/y (versus 3.4% in June – the fastest in almost two years), mainly on supply-side factors, while demand-side factors might have started to kick in. Inflation remains under control for now.” said Tim Leelahaphan, Economist for Thailand and Vietnam, Standard Chartered.

According to Standard Chartered, the fuel component of inflation has increased, while other components have been relatively low. Price pressures – particularly for food and fuel – may increase later in 2022 and in 2023.

Vietnam has continued to cut gasoline prices (by c.20%) since the beginning of July, after seven consecutive hikes since late April that resulted in a price increase of around 40%. The government has also proposed to cut gasoline import tariffs to 10% from 20%.