In its latest macroeconomic update about Vietnam, Standard Chartered Bank forecasts a rise in inflation in the near term.

The bank believes inflation will increase to 3.8% year-on-year in February, up from 3.6% in January 2025.

This would mark the seventh consecutive month of inflation remaining below 4.0% year-on-year. However, Standard Chartered economists anticipate the recent upward reversal since December to continue in February; any moderation would be only temporary. Demand-driven factors may contribute to further inflationary pressure in the near future.

The Vietnamese government has raised its 2025 growth target to at least 8% (from 6.5-7%), with a higher inflation expectation of 4.5-5.0% to create room for monetary policy flexibility.

The stronger growth outlook could help sustain low interest rates in the short term. However, Standard Chartered expects the State Bank of Vietnam (SBV) to raise interest rates by 50bps in Q2-2025 in response to rising inflation.

Retail sales growth is likely to ease to 8.2% year-on-year in February, down from 9.5% in January, according to Standard Chartered economists.

Meanwhile, export growth may rise to 23.2% year-on-year, supported by a low base and continued improvements in electronics exports. Imports and industrial production likely grew 24.0 and 6.2% year-on-year respectively. However, Vietnam’s monthly trade surplus may narrow to 1.5 billion USD, down from 3 billion USD.

Tim Leelahaphan, Senior Economist for Thailand and Vietnam, Standard Chartered Bank, said: “We stay cautious on the near-term economic outlook, as January’s macro indicators showed a moderation in both domestic and external data.

"Uncertainties around US trade policies also pose potential risks, given Vietnam’s large trade surplus with the US. In response, Vietnam has indicated its willingness to import more US agricultural products.”