Standard Chartered Bank maintains its GDP growth forecast of 10.8% year on year in the third quarter of 2022 and 3.9% in the fourth quarter, taking 2022 growth to 6.7%.

Standard Chartered expects Vietnam’s recovery to stay strong in August. Photo: dinhvuport.com.vn

In its latest Global Research report on Vietnam, the UK-based bank said Vietnam's economy will see a continued recovery in August, as the economic revival has shown signs of broadening.

Tim Leelahaphan, economist for Thailand and Vietnam, Standard Chartered Bank, said: “The recovery may accelerate markedly in H2 as tourism reopens after a two-year closure. That said, rising global oil prices may have negative consequences on the economy.” 

According to the UK-based bank, retail sales growth likely continued to accelerate to 60.2% year on year in August from 42.6% in July. Export, import and industrial production growth may have risen to 15.2%, 15.0% and 15.2%, respectively from 8.9%, 3.4% and 11.2% in July. A trade deficit of US$1.4 billion is expected in August, electronics are Vietnam’s largest export category. 

Standard Chartered economists see inflation at 3.0% year on year in August in comparison to 3.2% in July and believe it is under control for now. Price pressures may increase in H2 2022 and 2023. In addition to supply-side factors, demand-side ones might kick in more strongly. 

Standard Chartered Bank expected the State Bank of Vietnam (SBV) to stay vigilant against financial instability. The SBV plans to keep this year’s credit growth target at 14%, despite calls to raise it to ease cash-flow bottlenecks in the property market, according to Governor Nguyen Thi Hong. 

Banks may face greater liquidity risks on excessive lending to the real-estate sector - while 94% of property loans have maturities of 10-25 years, 80% of banks’ deposits are short-term. Vietnam’s credit growth has accelerated this year, it picked up to 9.4% year to date and 16.7% year-over-year in H1, according to SBV. Outstanding lending to the property sector represented about one-fifth of total loans.