Vietnam Economic Outlook
After losing speed in Q1, growth is projected to pick up in Q2. A smaller contraction in merchandise exports in April compared to Q1, coupled with lower inflation and interest rates in the quarter thus far, will have bolstered activity. That said, slumping industrial production and decelerating retail sales in April weighed on output. Moreover, China’s slower-than-expected rebound bodes poorly for exports growth in what remains of the quarter. In other news, recent improvements in the corporate bond market bode well for activity this quarter. Moreover, a loan restructuring scheme which started in April and lasts until June 2024—bringing repayment deferrals and lower lending rate ceilings for businesses—mandated by the Central Bank for commercial banks will likely boost activity ahead.
Inflation decelerated to 2.8% in April (March: 3.4%), driven by lower price pressures for food and housing. Inflation is set to accelerate on average this year compared to 2022 but remain below the Central Bank’s 4.5% target. The impact of recent stimulus measures and oil price fluctuations are key factors to watch.