The first quarter of 2024 is looking up for Vietnam, with a forecasted GDP growth of 5.5%, according to Singapore-based bank UOB (United Overseas Bank). This positive outlook follows a slower growth rate of 3.32% in the same period last year.
UOB’s Economic Growth Forecast for the first quarter of 2024 points towards encouraging signs for Vietnam’s economy. Despite ongoing global economic challenges, Vietnam is poised for growth, supported by the recovery of the semiconductor industry, steady growth in China and the region, and favorable shifts in the supply chain benefiting Vietnam and Southeast Asia.
Recent data from the General Statistics Office reveals promising figures. Foreign direct investment (FDI) registered in Vietnam during the first two months of the year surged by 38.6%, totaling nearly $4.29 billion compared to the same period in 2023. Total import and export turnover also rose by 18.6%, with exports reaching nearly $60 billion, a 19.2% increase.
On the domestic front, consumer services saw a notable uptick in activity, significantly outperforming the same period last year. Industrial production is estimated to have increased by 5.7%, with the processing and manufacturing sector up by 5.9%. The Purchasing Managers’ Index (PMI) for January and February indicated expanding production, surpassing the average of 49.3 in the same period of 2023.
Looking ahead, UOB predicts further recovery in the manufacturing and foreign trade sectors, particularly in the latter half of 2024. This recovery, especially in the semiconductor industry, is expected to be more robust, with global central banks adjusting interest rates accordingly.
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Maintaining its growth forecast for Vietnam at 6% for 2024, within the official target range of 6-6.5%, UOB also anticipates inflationary pressures to rise, with the full-year Consumer Price Index (CPI) expected to reach 3.8%, up from 3.25% last year. The State Bank of Vietnam is likely to keep policy rates stable throughout the year.
Regarding the currency market, although the USD/VND exchange rate hit a new high of VND24,700 at the end of February, UOB believes the Vietnamese dong (VND) still holds potential for a slight recovery. Despite short-term weakness, expectations of stronger GDP growth and recovery momentum in production and foreign trade are seen as favorable factors that could stabilize the VND in the long run.