HCM CITY— Viet Nam will experience a moderate economic recovery this year, Standard Chartered Bank has said in a report it released on Monday.
The forecast dismissed the subdued start to 2013, with GDP growing 4.9 per cent year-on-year in the first quarter, down from 5.5 per cent growth in the previous quarter.
The weak GDP growth number was consistent with data released earlier, which indicated sluggish credit growth, retail sales, visitor arrivals, and industrial production.
The report said the economy normally picks up after Q1, when business activity is distorted by the Lunar New Year.
"We remain confident in Viet Nam's trade sector, which looks set to maintain last year's strong momentum. "We reiterate our forecast of a trade surplus for 2013, as we expect exports to recover steadily and imports to only grow moderately."
Retail sales grew 11.7 per cent in Q1, the slowest pace since 2005. Last year it had grown at 21 per cent.
On a more positive note, vehicle sales had shown tentative signs of improving, which could indicate a rebound in retail sales in the next few quarters.
Manufacturing growth was also sluggish in Q1, averaging 5.5 per cent. But it rebounded to 5.6 per cent in March after contracting 10.1 per cent in February.
Industrial production was likely to pick up this year thanks to a supportive policy environment and an investment recovery.
In the external sector, trade performance was volatile in Q1, but there was a surplus of US$382 million.
Exports grew 21 per cent during the period. The pace of export growth, though slightly lower than a year earlier, was much higher than that of Viet Nam's ASEAN peers.
Import growth surged to 21 per cent in Q1 from 15 per cent in the previous quarter, indicating improving local demand.
The trade sector would maintain its positive momentum in 2013 given recovering global demand and a moderate pick-up in the domestic market. This should also strengthen the country's external position.
Inflation eased in March to 6.6 per cent from 7 per cent in February. Core inflation slowed to 11.3 per cent from 12.2 per cent.
But food prices had started to edge up after bottoming last year, diverging from lower core inflation recently.
Rising food prices could be a potential upside risk to inflation given the large weighting for food in the CPI basket (39.93 per cent).
The SBV cut policy rates by 7 percentage points since March 2012.
It was under government pressure to facilitate business activity given the slow credit growth.
Recently it reiterated its pro-growth stance by implementing flexible interest rates and credit measures to achieve its 12 per cent credit growth target. —VNS