Vietnam's economic growth may slow in H2, but outlook remains positive: UOB report
Vietnam's economic growth might decelerate in the second half compared to that in the first half, with several supportive factors expected to sustain the overall growth outlook, according to the a report released by the Singaporean-based United Overseas Bank (UOB)'s Global Economics & Market Research Unit on July 2.
Manufacturing electronics components at Youngbag ViNa company, Binh Xuyen Industrial Zone, Vinh Phuc province (Photo: VNA)
HCM City (VNA) – Vietnam's economic growth might decelerate in the second half compared to that in the first half, with several supportive factors expected to sustain the overall growth outlook, according to the a report released by the Singaporean-based United Overseas Bank (UOB)'s Global Economics & Market Research Unit on July 2.
According to UOB experts, Vietnam’s real GDP grew by 6.93% year-on-year in Q2, continuing the momentum from the 5.87% increase in Q1 and previous quarters. Overall, the economy expanded by 6.42% in the first half, significantly outpacing the 3.84% growth logged in the same period of 2023.
The manufacturing and services sectors continued to drive most business activities, while foreign trade remained robust in Q2. The increase in semiconductor sales since mid-2023 indicates that this momentum may persist for another 1-2 quarters.
The UOB maintained its growth forecast for Vietnam at 6.0% for 2024, compared to the government's target range of 6.0-6.5%.
Notably, the analysts said most foreign investors have a positive long-term outlook for Vietnam. This is evidenced by the 13.1% year-on-year increase to 15.2 billion USD in registered foreign direct investment (FDI) in the first six months.
♌ Regarding interest and exchange rates, the UOB’s report noted that the recent depreciation of the VND against a strengthening USD and rising inflation may prompt the State Bank of Vietnam to be cautious with any changes to policy rates. Considering the potential slowdown in growth in the latter half, the UOB projected that the central bank would maintain the refinancing rate at the current level of 4.5%./.
Singapore-based United Overseas Bank (UOB) has projected the economic growth rate of Vietnam at 6% for the second quarter of this year and for the full year on increasing chip-making demand, the recovery of Chinese and regional economies, as well as ongoing supply chain shifts.
The Vietnam dong is expected to fall to 25,600 VND per US dollar in the second quarter of 2024, and then to 24,800 VND in the final quarter of the year and 24,600 VND in the first quarter of next year, according to experts from the United Overseas Bank (UOB).
Amidst economic recovery, with the likelihood of interest rate cuts diminishing, Singapore-headquartered United Overseas Bank (UOB) believes that the State Bank of Vietnam will maintain its refinance rate at the current 4.50%.
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