In the recent report on Vietnam’s economic growth for the second quarter, UOB Bank warned that the country’s growth may slow in the next two quarters due to a high base and external risks. While Vietnam’s economy has been growing at a steady pace, with GDP increasing by 6.93% in the second quarter compared to the same period in 2023, this growth is expected to slow down in the coming months.
According to UOB’s research team, external factors such as conflicts in Ukraine and the Middle East could disrupt trade and energy markets. However, there are also supportive factors that will help maintain Vietnam’s economic momentum, including the recovery in semiconductor demand, stable growth in China and Southeast Asia, and the possibility of monetary policy easing by major central banks.
Despite these challenges, UOB maintained its forecast for Vietnam’s growth this year at 6%, which is below the government’s target of 6-6.5%. With growth likely to ease in the second half of the year, UOB forecasts that the State Bank of Vietnam (SBV) will maintain its refinancing rate at its current level of 4.5%. However, factors such as inflation and currency fluctuations may cause SBV to be cautious about making any changes to policy rates.
The average consumer price index (CPI) increased by 4.39% compared to the same period last year, which marks the fifth consecutive increase in inflation. This suggests that inflation is approaching a threshold of 4.5%, which could impact consumers and businesses alike. Factors such as an increase in basic salaries by 30% and minimum wages for employees in enterprises by 6% from July 1 are believed to have contributed to rising inflation levels.
In response to these challenges, governments around Europe have turned towards non-interest rate measures to support their economies instead of continuing lowering interest rates. Similarly, Vietnam is now focusing on non-interest rate measures rather than monetary policy tools like interest rates cuts or quantitative easing to boost economic activity.
Overall, while there are some challenges ahead for Vietnam’s economy this year, it remains resilient thanks to supportive factors such as strong demand from semiconductor markets and stable growth in China and Southeast Asia. With careful management of external risks and continued focus on non-interest rate measures