Singapore-based United Overseas Bank (UOB) has projected the economic growth rate of Vietnam at 6% for the whole 2024 on increasing chip-making demand, the recovery of Chinese and regional economies, as well as ongoing supply shifts.
Exports are making a good recovery. (Photo: VietnamPlus)
Hanoi (VNA) –𝓡 Singapore-based United Overseas Bank (UOB) has projected the economic growth rate of Vietnam at 6% for the whole 2024 on increasing chip-making demand, the recovery of Chinese and regional economies, as well as ongoing supply shifts.
The bank said on June 10 that Vietnam’s economic recovery momentum will maintain in the second half of the year, given the economy to edge up to 6% in the second quarter from 5.66% in the first one.
The economic performance during January – March was spurred by the recovery in production and services sectors and the rebound of the external trade which recorded the fastest pace since 2021, reversing the decline seen for most of 2023.
Data from the General Statistics Office (GSO) affirmed positive outlook for the Vietnamese economy, with the Purchasing Managers’ Index (PMI) unchanged at 50.3 in May that signaled a second consecutive marginal monthly improvement in business conditions in the industry.
Meanwhile, industrial production rose by 8.9% in May, marking the third consecutive month of expansion.
Exports posted two-digit growth for the third consecutive month, at 15.8% in May as compared to 10.6% in April. Imports rose 29.9% in May from 19.9% in the previous month.
The realised foreign direct investment rose 7.8% to reach 8.3 billion USD during the five-month span, the fastest pace since 2018.
The total retail sales of goods and services increased by 8.7%, supported by robust restaurant, accommodation and tourism services.
Total retail sales of goods and services rise by 8.7%. (Photo: VietnamPlus)
UOB experts suggested the State Bank of Vietnam (SBV) focus on boosting credit growth to support economic activities, new growth areas, green transition, circular economy and social housing projects.
According to the SBV’s report, credit by May 10 this year increased by 1.95%, equivalent to more than 264.4 trillion VND, compared to the beginning of this year. The central bank has set out a target for credit growth of 14-15% this year, or some 2 quadrillion VND.
With improved business activities and inflation rate hovering below the target as well as concern about the domestic currency, an increase in interest rates may be a barrier to credit and liquidity environment.
The UBO believes that the SBV will maintain its refinancing rate at the current level of 4.5%, and focus on supporting credit growth and many other support measures.
The UBO holds that the Vietnamese central bank will keep the interest rate stable in 2024. (Photo: VietnamPlus)
UOB believes that although domestic fundamentals are improving, the VND is still affected by the strength of the USD broadly in the second quarter and traded at a new record low of nearly 25,500 VND/USD.
The central bank has made interventions in the foreign exchange market, helping control exchange rate fluctuations. However, the VND could recover in the second half due to reduced external pressure from the USD ahead of the anticipated interest rate cut by the Federal Reserve in September.
Furthermore, the VND could benefit from the further recovery of the CNY in the second half as the Chinese economy shows clearer signs of stability.
The VND/USD exchange rate is forecast to be anchored at 25,200 in the third quarter, and 25,000 in the fourth quarter, according to UOB./.
In the first nine months of the year, Vietnam’s economy expanded 4.24% year-on-year, which is an improvement against the 3.72% posted in the first half but was only half the pace of the 8.85% year-on-year recorded in the same period of last year.
There is an increasing preference for digital banking and new payment modes such as mobile banking apps, e-wallets, QR code-based payments, e-commerce payment platforms and mobile wallet debit or credit cards among Vietnamese consumers, the United Overseas Bank (UOB) said in its report “ASEAN Consumer Sentiment Study" (ACSS) which was launched on November 1.
With the pace of economic activities on the mend and inflation rates already easing below the target level, the State Bank of Vietnam (SBV) will maintain its refinancing rate at the current level of 4.5% to support economic recovery, the United Overseas Bank (UOB) said in a report.
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