Goods loaded at Cat Lai Port in HCM City. The Standard Chartered maintains its 7.3 percent growth forecast for Vietnam in 2022, continuing to expect a post-COVID-19 economic acceleration. (Photo: VNA) Hanoi (VNS/VNA) - Standard Chartered has lowered its growth forecastfor Vietnam for 2021 from 6.7 percent to 6.5 percent.
The bankmaintains its 7.3 percent growth forecast for 2022, and continues to expect apost-COVID-19 economic acceleration.
“Webelieve Vietnam is moving towards its goal of becoming a regional supply-chainhub, a modern industrial economy and a high-income country in the future,” saidTim Leelahaphan, Economist for Thailand and Vietnam, Standard Chartered.
“Vietnammanaged the COVID-19 situation well in 2020, further enhancing its appeal toforeign investors. The country had already benefited from the ongoingsupply-chain shift in recent years. In the near term, the country’s pandemicmanagement will be crucial to the outlook,” he went on.
Standard Chartered’s economists anticipate domestically oriented sectors suchas retail are likely to be the hardest-hit if the current COVID-19 wavepersists. The focus now is on whether the impact on the industrial sector willbe temporary or more long-lasting.
Whilethe global pandemic has weighed on Vietnam’s economy via reduced tourism,supply-chain disruptions and weaker overseas demand, external indicators areshowing a strong recovery. Exports in the first half of the year rose 28.4 percentyear-on-year and imports rose 36.1 percent.
Accordingto the UK-based bank, rising inflation is reducing the likelihood of furtherinterest rate cuts. The bank does not expect rate hikes despite improvingeconomic and credit growth from the last quarter of 2020. It also expects theState Bank of Vietnam (SBV) to keep its refinancing rate at 4.0 percent throughto the end of 2023 to support credit growth. The possibility of a rate hike maygradually emerge if inflation and growth accelerate faster than expected.
StandardChartered has recently lowered its US dollar – Vietnamese dong forecasts to22,900 at the end of the third quarter of 2021 (from 23,100) and to 22,850 atthe end of 2021 (23,000). Its end of 2022 forecast remains unchanged at 22,500.The balance of payments remains highly supportive of the currency, with strongexports and high net FDI inflows.
Earlier,on July 20, the Asian Development Bank (ADB) also lowered its forecast for Vietnam’sgross domestic product (GDP) growth in 2021 to 5.8 percent from its previousprediction of 6.7 percent in April, as the fourth wave of COVID-19 infectionshampers the country's recovery.
Vietnam'seconomic growth accelerated from 1.8 percent in the first half of 2020 to 5.6 percentin the same period this year as the global recovery from the pandemic boostedexports, the bank said.
However,the ongoing wave of COVID-19 infections has led to disruptions in supply chainsand prolonged social distancing measures in many provinces and cities whosegrowth rates are high. These have severely affected the circulation of goodsand greatly limited economic activity in 2021.
Also aspart of the report, the bank is projecting 7.2 percent economic growth fordeveloping Asia in 2021, compared with its forecast of 7.3 percent in April, asnew COVID-19 outbreaks slow the recovery in some regional economies.
Excludingthe newly industrialised economies of Hong Kong (China); the Republic of Korea;Singapore; and Taiwan (China), developing Asia’s updated growth outlook is 7.5 percentfor 2021 and 5.7 percent for 2022, compared with earlier projections of 7.7 percentand 5.6 percent, respectively./.
VNA
