UOB raises Vietnam growth forecast to 6.4%

Following strong third-quarter GDP results, UOB raised Vietnam's full-year growth forecast by 0.5 percentage points to 6.4%.

Singapore's United Overseas Bank (UOB) made the forecast after the General Statistics Office announced that GDP grew by 7.4% in the third quarter, despite the impact of Typhoon Yagi . According to UOB, this result was "surprising" because it exceeded their forecast of 5.7% and the market average of 6.1%.

This is also the highest rate since the third quarter of 2022, creating a cumulative increase of 6.82% in the first nine months of the year compared to the same period in 2023. Therefore, this bank strongly raised the GDP growth forecast for the whole year to 6.4% to "reflect the results to date and the disruption in activities in the early fourth quarter of 2024".

Previously, the bank reduced its growth forecast for Vietnam to 5.9% after storm No. 3 made landfall, causing damage of VND81,500 billion, according to the Ministry of Planning and Investment .

To date, many international organizations continue to maintain or even raise Vietnam's growth forecast after Typhoon Yagi. Accordingly, ADB maintains its forecast of 6%. The World Bank (WB) expects a growth rate of 6.1%.

Recently, the International Monetary Fund (IMF) expected Vietnam's GDP to grow by 6.1% this year, higher than the organization's forecast in June. HSBC is the most optimistic with a forecast of 6.5%. Meanwhile, Vietnam's GDP target for this year is 6.5-7%.

Assessing the fourth quarter situation, after the Vietnam Purchasing Managers' Index (PMI) for September announced by S&P Global (USA) reversed to 47.3 points - the first time in the decline zone after 5 consecutive months of expansion, UOB said that attention should be paid to production capacity and supply chain, as well as the agricultural and service sectors.

“Disruptions (from Typhoon Yagi) are likely to be more evident in October and November,” the report said, as fourth-quarter GDP is forecast to slow to 5.2%.

Regarding monetary policy, UOB forecasts that the State Bank will adopt a targeted approach to support affected individuals and businesses, rather than deploying a broad tool such as cutting interest rates across the country. Therefore, the refinancing rate is likely to remain at the current level of 4.5%.

Vietnam’s 2025 GDP growth forecast remains at 6.6%, reflecting an expected output increase early next year to offset losses from Yagi, as well as spillover effects from the US Federal Reserve’s monetary easing and China’s economic stimulus measures.

Source