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In its latest Vietnam-focused macro-economic research report, Standard Chartered forecasts the nation’s recovery will accelerate markedly in the year ahead, with GDP growing by 6.7% for the entire year, with economic indicators being recovered on a large scale.
Experts from Standard Chartered note that the country remains a key manufacturing centre and link within the global supply chain, despite facing challenges related to geopolitical tensions and the COVID-19 pandemic.
However, they also noted that the nation may face short-term risks, especially related to tourism recovery and the COVID-19 pandemic.
According to Tim Leelahaphan, economist for Thailand and Vietnam at Standard Chartered, the re-opening of the tourism sector, which accounts for 10% of Vietnamese GDP, will be a factor that must be observed and evaluated seriously in the second quarter of the year after two years of closure due to the pandemic.
FDI inflows into the country have also started to pick up this year after a slowdown in 2021.
Moving forward, the bank anticipates this trend to continue, especially in areas such as electricity generation and supply, petroleum, and air conditioning equipment.
Foreign investors will therefore continue to be the main driving force for the nation to contribute to the global supply chain, said Leelahaphan.
Many major global technology enterprises have moved or planned to move their production from China to the nation over recent years in order to diversify their supply chains, he said, adding that the country continues to be a regional manufacturing hub in terms of electronics, textiles, and footwear.
Standard Chartered maintains its inflation forecast for the nation at 4.2% for this year and 5.5% for 2023. The bank stated that supply factors will bring risks of increasing inflation, especially amid current geopolitical tensions.
It also maintains its medium-term constructive view on the Vietnamese dong (VND) amid expectations of a strong balance of payments (BoP).
Moving forward, the country is likely to continue to run a current account surplus this year as the tourism sector recovers, despite higher commodity prices, it said.
As a result, the bank forecasts the USD-VND exchange rate to be at 22,300 by the end of the year, and 22,000 by the end of 2023.
Previously, experts from the Asian Development Bank (ADB) predicted that the Vietnamese economy would soar by 6.5% this year and grow stronger at 6.7% in 2023.
Meanwhile, Vietnam’s economic growth was respectively projected at 6.2% and 5.3% for this year by the Hong Kong & Shanghai Banking Corporation (HSBC) and the World Bank.
