HCMC – Singapore’s United Overseas Bank (UOB) has revised its forecast for Vietnam’s gross domestic product (GDP) growth this year to 7% from the previously predicted 6.5%. This is based on the strong growth in the second quarter of the year and the historical track record of a generally robust performance in the second half of the year.
UOB released a report on Vietnam’s GDP growth last quarter and forecasts for the last six months of the year. The forecast of Vietnam’s 7% GDP growth was made assuming no further disruptions from Covid-19 and growth of 7.6-7.8% in the second half.
According to the bank, the data released by the General Statistics Office showed Vietnam’s real GDP growth shifted to the upside last quarter, which expanded 7.7% from the 5% in the first quarter, surpassing the estimate of 5.9% and UOB’s estimate of 6%.
The sharp rebound was driven by manufacturing activities which accelerated for the fourth straight quarter, and a sharp rebound in services output which continued to regain its footing since the last contraction in the third quarter of last year.
Activities have returned to normal as restrictive Covid-19 measures were eased and borders reopened.
However, downside risks remain. These include the impact of the ongoing Russia-Ukraine military conflict, energy and food prices, and supply chain disruptions. In addition, the U.S. Federal Reserve’s aggressive policy bias could be another source of financial market risk for emerging economies such as Vietnam.
In addition, the Vietnam dong has not been spared from the Asia-wide weakness inflicted by the aggressive repricing in Fed rate hike expectations and concerns of a deeper China slowdown.
According to the General Statistics Office, Vietnam’s GDP expanded 7.72% in the second quarter of this year, the highest for the quarter since 2011.
The figure in the first half of the year was 6.42%, the highest for the period in three years, and higher than the 2.04% and 5.74% in the same period of 2020 and 2021 but lower than the growth rates in the first half of 2018 and 2019.