Vietnam Economic Forecast

After H1 saw growth that was around half the 10-year pre-pandemic average, the economy should be gaining momentum in H2 thanks to rate cuts by the Central Bank and improvements in the industrial and external sectors. In July–August, industrial production growth was close to triple Q2’s limp reading, and the decline in merchandise exports eased sharply. In addition, in the same two-month period, figures for retail sales and visitor arrivals showed large year-on-year expansions, hinting at resilient private consumption and services exports, respectively. In September, Vietnam upgraded its relationship with the U.S. to a “comprehensive strategic partnership,” the same title it uses for China and India. In the same month, several U.S. companies announced investments in Vietnam and partnerships with Vietnamese firms. U.S.-Vietnam trade ties are likely to strengthen further going forward.

Inflation rose to 3.0% in August from July’s 2.1%, still well in line with the government’s target of 4.5% average inflation for 2023. The uptick was mainly driven by a near-stabilization in transport prices, following the sharp year-on-year decline registered in July. Looking ahead, our panelists expect inflation to average slightly above 2% for the remainder of the year.