However, it is still an improvement from 5 per cent in 2023. Q1-2024 GDP growth moderated to 5.7 per cent (from 6.7 per cent in Q4-2023). The bank lowered its Q2 y/y growth forecast to 5.3 per cent (from 6.3 per cent) and Q3 to 6.0 per cent (from 7.2 per cent), but Q4 growth is expected to recover to 6.7 per cent.

According to a Standard Chartered economist, trade, a key source of growth and investment for Vietnam, also faces short- and long-term challenges. However, Vietnam’s recovery remains intact despite risks. Retail sales growth was still robust in Q1.

Standard Chartered has also lowered its 2024 inflation forecast to 4.3 per cent from 5.5 per cent to reflect lower-than-expected Q1 inflation. The bank expects rates to stay on hold at 4.5 per cent until end-Q3, and could be raised by 50 basis points in Q4 in response to growth-driven inflation.

“Vietnam is improving its position in global supply chains. Foreign investment continues to be attracted by a favourable investment environment and potential ramp-up of US-China trade tensions,” said Tim Leelahaphan, economist for Thailand and Vietnam, Standard Chartered. “With the economic recovery starting to gain momentum, we think there will be less need to provide monetary policy support,” he added.

According to Leelahaphan, there is a balanced view on the VND given improvements on the external front and reserve rebuilding. Strong export growth is providing some support for the currency, while imports point to further gains. The bank forecasts a current account surplus of 3.5 per cent of GDP in 2024.