HCM City (VNA) – Singapore-based United Overseas Bank (UOB) has revised up its GDP growth forecast for Vietnam to 6.4% this year from the previous projection of 5.9%.
Specifically, UOB assessed that Vietnam's economic growth in the third quarter was significantly higher than the market's average forecast of 6.1% and UOB's previous forecast of 5.7%.
Thus, in the past three quarters, the country's GDP increased by 6.82% compared to the previous year, higher than the growth rate of the years of 2020, 2021, and 2023. However, this rate is still lower than that of the first nine months of 2022.
The latest results contributed to expanding the 7.09% (adjusted) growth in the first quarter, creating a cumulative growth rate of 6.82% in the first nine months of 2024.
According to UOB, the strong recovery of production and business activities after the COVID-19 pandemic in Vietnam contributed to the record positive economic growth in the third quarter.
Manufacturing and services continued to be the main drivers of business activity while foreign trade remained robust in the third quarter. The increase in semiconductor sales since the middle of last year suggests that the growth momentum is likely to continue in the coming quarter.
In the third quarter, Vietnam suffered an estimated economic loss of more than 3 billion USD due to Typhoon Yagi. In mid-September, Minister of Planning and Investment Nguyen Chi Dung said the storm had affected 26 localities and 40% of the country’s population.
Inflation decelerated to 2.6% year-on-year in September from 3.45% in August, as prices of food, housing and other key components continued to fall, according to UOB analysts.
In the third quarter of 2024, the consumer price index (CPI) inflation eased to 3.5% year-on-year and from 4.4% in the second quarter. The average CPI increase so far has slowed to 3.9% year-on-year from a peak of 4.1% in July, below the State Bank of Vietnam (SBV)'s target of 4.5%.
Other data in the third quarter reflected the overall resilience of the Vietnamese economy. Both exports and imports in September recorded respective growth rates of 10.7% and 11.1% compared to the same period last year, marking the 7th consecutive month of double-digit growth in the year.
The country’s export earnings rose by 14.6% year-on-year in the last nine months, while its imports increased by 16.5% compared to the same period last year. Vietnam posted a trade surplus of 20.8 billion USD in the period.
Notably, the upswing in semiconductor sales since mid-2023 suggests that the momentum will likely be sustained in the 1-2 quarters ahead, UOB said.
The bank kept its growth forecast for Vietnam’s economy in 2025 unchanged at 6.6%. This reflects an expected ramp-up in output early next year to compensate for the earlier losses as a result of Typhoon Yagi, as well as spillover effects from the US Fed’s policy easing and China’s stimulus measures.
With the ease in inflation, the value of the US dollar on the back of the US Fed’s easing policy, and the aftermath of Typhoon Yagi, there is a stronger likelihood that the SBV will stabilise rates, said researchers.
They anticipate the SBV will maintain its refinancing rate at 4.5% while focusing on facilitating loans growth and other support measures./.
