Economy to grow at 7.2% in 2023: Standard Chartered

By Duc Minh   January 7, 2023 | 04:00 am PT
Economy to grow at 7.2% in 2023: Standard Chartered
Containers are seen at Cat Lai Terminal in Ho Chi Minh City in April 2021. Photo by VnExpress/Quynh Tran
Standard Chartered Bank expects Vietnam’s GDP to grow at 7.2% this year and 6.7% next year.

"We still have conviction about Vietnam’s high growth potential over the medium term," Tim Leelahaphan, the bank’s economist for Thailand and Vietnam, is quoted as saying in its "Vietnam - Still enjoying high-growth status" report released Friday.

While macro indicators moderated somewhat in the fourth quarter of 2022, they remained strong, and retail sales grew well in the second half, showing improvement in domestic activity, the report said.

Foreign direct investment would continue to increase though the outlook depended on the global economy.

However, exports could face global headwinds, and inflation could pose a threat to Vietnam’s continued recovery.

Inflation was expected to rise throughout 2023, potentially reaching 6% in the final months of the year and averaging 5.5% in both 2023 and 2024, up from 3.2% in 2022, with the fiscal deficit persisting and being one of the causes.

The State Bank of Vietnam was likely to increase its interest rates by another percentage point in the first quarter of this year, and to stay on hold through the end of next year.

"We expect the central bank to stay vigilant against inflation, a weakening Vietnamese dong, and financial instability arising from risky loans in the real estate sector."

The central bank could prefer a relatively strong Vietnamese dong as long as it did not harm the country’s trade competitiveness.

The replenishment of forex reserves was likely to be a key priority for the central bank, with an improving current account backdrop and tourism recovery being supportive of the dong.

The USD/VND exchange rate was likely to be 23,400 by the end of this year and 23,000 by the end of next.

In its latest report, HSBC maintained Vietnam’s 2023 economic growth forecast at 5.8%.

Meanwhile, Smart Invest Securities Company suggested three possible scenarios of 7.3%, 6.9% and 6.2% growth.

The government has set a target of 6.5%.

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