Standard Chartered Bank forecasts Việt Nam’s GDP growth at 10.8 per cent and 3.9 per cent for the third and last quarter of 2022 respectively, taking full-year growth to 6.7 per cent. However, high global oil prices may have negative consequences on the economy.

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

Standard Chartered economists expect the State Bank of Vietnam (SBV) to keep the policy rate on hold at 4 per cent in 2022 to support economic growth and businesses, despite rising inflation. Retail sales growth has likely continued to improve strongly to 30.2 per cent year-on-year in July (from 27.3 per cent in June). Export, import and industrial production growth in July is expected to pick up to 22.2 per cent, 20 per cent and 15.2 per cent (from 20.0 per cent, 16.3 per cent and 11.5 per cent in June) respectively. A trade surplus remains elusive, while another deficit is anticipated this month.

“We see inflation jumping to 3.6 per cent year-on-year (versus 3.4 per cent 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,” Leelahaphan said.

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.

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

Recently, HSBC raised Việt Nam’s growth outlook this year to 6.9 per cent from the previous prediction of 6.6 per cent but also downgraded the forecast for 2023 to 6.3 per cent from 6.7 per cent.

The Singapore-based United Overseas Bank (UOB) also revised up the country’s 2022 GDP growth forecast to 7 per cent from 6.5 per cent, assuming no further severe domestic disruptions from COVID-19, and growth of around 7.6 - 7.8 per cent in the second half of the year.

Meanwhile, the Asian Development Bank (ADB) maintained its growth forecast issued in mid-April, at 6.5 per cent for 2022 and 6.7 per cent for 2023.

In the first half of 2022, Việt Nam’s GDP grew 6.4 per cent from the same period last year thanks to the expansion of 9.7 per cent in the manufacturing sector and 6.6 per cent in the service sector. — VNS