Vietnam's GDP growth slows in Q1 ahead of expected recovery, photo VNA

Portfolio manager and board member of PYN Elite – a Finnish fund focusing on Vietnamese listed equities – Petri Deryung noted in his latest letter to investors that Vietnam experienced a deceleration in its GDP growth, falling to 3.3 per cent in the first quarter.

Similar to other Asian nations, Vietnam's exports have displayed a lacklustre performance since autumn. However, the decline does not solely account for the slowdown in the country's growth.

Added to this are the actions taken by the authorities in late autumn that resulted in a decrease in liquidity and a significant rise in interest rates.

Deryung noted that they created an atmosphere of uncertainty in the domestic economy, prompting consumers to postpone their planned purchases. However, it is highly likely that domestic consumption has already reached its lowest point during the initial quarter of this year.

“For the remainder of 2023, GDP growth is set to accelerate as the interest rates are clearly trending down. There is no indication of keeping the interest rates high, as there is no need to fight inflation when consumer prices have been kept relatively stable,” he said.

“The Vietnamese government’s target for GDP growth is set at 6.5 per cent this year, but PYN Elite’s expectation is slightly more modest at 5.5 per cent,” added Deryung.

In Deryung's view, the Vietnamese market currently presents attractive stock prices, but the key question remains when the improved liquidity conditions and lower interest rates will entice investors to return in large numbers.

The government of Vietnam has implemented effective measures to expedite economic growth, impressing many investors with the speed of their decision-making. However, the stock market is still in a consolidation phase without a clear upward trend.

The net asset value of PYN Elite has been gradually increasing, currently standing at a year-to-date growth of more than 6 per cent.