Strong Q1 growth projected for Vietnam despite trade headwinds

THE HANOI TIMES – Vietnam’s economy is poised for robust growth in the first quarter of 2025, according to the latest macroeconomic update from Standard Chartered Bank.

The UK-based bank expects gross domestic product (GDP) to grow 7.7% year on year, compared to 7.6% in the final quarter of 2024.

Despite global trade uncertainties, the bank maintains its full-year growth projection at 6.7%, anticipating some moderation in the second half.

The bank said  Vietnam’s positive outlook  continues its deepening integration into global trade networks, supported by a series of free trade agreements and resilient foreign direct investment (FDI) inflows. These factors are helping to solidify the country's role in global manufacturing and export supply chains.

Key economic indicators for March signaled steady momentum across multiple sectors. Retail sales growth was estimated to have moderated to 6.2% year-on-year, down from 9.4% in February. Exports were likely to have grown by 8.2% year-on-year, falling from 25.7% in the previous month. However, exports of electronics were believed to have continued gaining strength.

Imports and industrial production were projected to have grown by 6% and 6.2% year-on-year, respectively, compared to the remarkable jumps of 40% and 17.2% in February. The monthly trade balance may have swung to a surplus of $3.7 billion.

Meanwhile, inflation was likely to edge up to 3.4% in March from 2.9% in the previous month. If sustained, rising inflationary pressures could pose new challenges for monetary policy management.

“While economic growth remains strong, trade risks and currency fluctuations could impact policy decisions,” said Tim Leelahaphan, Senior Economist for Vietnam and Thailand at Standard Chartered Bank. “Vietnam may consider maintaining a flexible monetary policy to ensure a resilient financial sector and navigate potential economic fluctuations.”

Another bank, Singapore's UOB, is forecasting a solid performance, predicting GDP growth of 7.1% in the first quarter and 7% for the full year to 2025.

Meanwhile, Vietnam’s General Statistics Office (GSO) has outlined an ambitious growth scenario, targeting annual GDP growth of over 8%. To achieve this, Q1 growth would have to reach 7.7%, followed by 8.1% in Q2, 8% in Q3, and 8.2% in Q4.

According to analysts at Rong Viet Securities (VDSC), first-quarter growth is still benefiting from a low base in the year-ago period, with estimates ranging from 7.3% to 7.5%, below the GSO's target.

Offering a more optimistic outlook, Can Van Luc, Chief Economist at BIDV and member of the National Financial and Monetary Policy Advisory Council, said GDP growth could hit 8% in the first quarter and possibly maintain that pace in subsequent quarters.