Standard Chartered lowers Vietnam’s 2023 growth forecast to 6.5%

On the external front, the bank also became more circumspect. Macro indicators for April indicated a moderation. Industrial production barely increased while imports and exports both experienced year-over-year declines. The trade surplus increased from $700 million in March to $1.5 billion.

Exports decreased by 11.8% yearly in the first four months of the year, while imports decreased by 15.4% yearly, creating a $6.4 billion trade surplus.

Inflation was 2.8 percent in April, easing for the third month and down from 4.9 percent in January; core inflation rose 4.6 percent as retail sales saw a robust growth of 11.5 percent. Disbursed FDI in January – April 2023 totaled $5.9 billion, down 1.2 percent year-on-year; pledged FDI was $8.9 billion, down 17.9 percent.

“The significant import contraction points to slowing economic activity given Vietnam’s import-intensive nature, despite still-strong domestic consumption,” said Tim Leelahaphan, Economist for Thailand and Vietnam, Standard Chartered Bank.

Standard Chartered forecasts the State Bank of Vietnam (SBV) will make another 50bps cut in the refinancing rate to 5 percent by the end of the second quarter, followed by rates on hold until end-2025. However, it does see an upside risk to the rate forecast, particularly as the year ends and the SBV may prioritize financial stability over growth.

“The SBV has shifted to a pro-recovery stance since the start of 2023. In addition to cutting rates, it is aiding businesses facing difficulties by giving them more time to address liquidity shortages. In April, it allowed easier loan terms, including delaying loan repayments (by up to 12 months) and providing rate waivers. The property market may need further liquidity support, as measures appear to have only reduced short-term repayment pressure,” said Tim.