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Jun 11, 2024 / 15:30

UOB predicts Vietnam’s GDP to grow by 6% in Q2

Along with the 6% forecast for Q2, UOB maintains Vietnam’s annual growth forecast at 6% for the year.

Singapore-based United Overseas Bank (UOB) forecasts that Vietnam's GDP will grow by 6% in the second quarter, reflecting the positive trajectory of the country's economic growth.

 Electronics production at 4P Company in Hung Yen Province. Photo: Pham Kien/The Hanoi Times

This forecast is based on data up to the end of May, indicating that domestic economic activities are progressing well, with strong performance in exports and Foreign Direct Investment (FDI), noted the bank.

In its latest report, UOB pointed out that one of the key indicators supporting this forecast is last month's Purchasing Managers' Index (PMI), which reached 50.3 according to a survey by S&P Global. This marks the fourth increase in five months, pointing to sustained growth momentum. Additionally, the Industrial Production Index (IIP) rose by 6.8% in the first five months of the year compared to the same period in 2023, as reported by the General Statistics Office.

Exports also posted double-digit growth last month. Since the beginning of the year, FDI has increased by 7.8% compared to the same period last year, reaching US$8.3 billion, the fastest five-month growth since 2018.

"This indicates that investors continue to have confidence in Vietnam's political environment and its competitiveness," stated the UOB.

The Singaporean bank pointed out that domestic economic activities are on the right track, with total retail sales of goods and consumer services revenue continuing to improve. This growth is supported by the hospitality, accommodation, and tourism sectors.

In Q1, Vietnam's economy grew by 5.66%. Along with the 6% forecast for Q2, UOB maintains Vietnam’s annual growth forecast at 6%, aligning with the Government’s target range of 6-6.5%.

The bank expects the State Bank of Vietnam to keep its key policy interest rates unchanged for the rest of the year. This decision aims to balance a stable domestic economic recovery, moderate inflationary pressures, and exchange rate conditions.

In Q2, the Vietnamese dong (VND) was affected by the strength of the US dollar, trading at a record low of nearly VND25,500 per US$. However, UOB believes that the VND could recover in the latter half of the year as the pressure from the US$  eases, particularly with the anticipated rate cuts by the US Federal Reserve in September.

Additionally, the VND could benefit from the recovery of the Chinese yuan over the next six months as China's economy shows clearer signs of stabilization. Therefore, UOB forecasts the USD/VND exchange rate at VND25,200 in Q3 and VND25,000 in Q4.