According to the report from Standard Chartered, June macro data will likely continue to improve slightly from May but remain relatively weak as a still-deep contraction in trade leads to slower manufacturing and economic activity. Recent nationwide blackouts are likely to have weighed on economic activity.

Exports are predicted to fall 5.2 per cent on-year in June, imports to fall 17 per cent, and industrial production growth to edge up to 1.2 per cent. The trade surplus is likely to rise to $4.1 billion from $2.2 billion in May. Inflation may ease further to 2.2 per cent on-year, from 2.4 per cent.

The bank sees still-robust retail sales growth of 12.2 per cent on-year. Disbursed foreign direct investment (FDI) in the first five months of 2023 declined 0.8 per cent on-year to $7.6 billion, while pledged FDI fell 7.3 per cent to $10.9 billion.

Standard Chartered forecasts the State Bank of Vietnam (SBV) to cut the benchmark refinancing rate by another 50 basis points to 4 per cent in Q3 and stay on hold until the end of 2025. The SBV cut the rate to 4.5 per cent from 5 per cent on June 16, which followed two earlier 50 basis points cuts, in March and May.

Tim Leelahaphan, economist for Thailand and Vietnam, Standard Chartered Bank, said “We think the SBV is currently focused more on growth amid easing price pressure. While it is reversing the monetary tightening implemented last year, lingering concerns about inflation and financial instability should prevent additional rate cuts beyond the 50 basis points we currently expect.”