HCMC – Singapore’s United Overseas Bank (UOB) has forecast that Vietnam’s economic recovery will continue in the second half of this year.
In its economic report released on June 10, the bank said this projection is based on Vietnam’s strong economic performance in the first half of the year.
Vietnam’s economy started the year robustly, with 5.66% GDP growth in quarter one following 6.72% growth in the final quarter of last year and 5.33% in the third quarter 2023. This growth surpasses the 3.41% increase in the first quarter 2023 and marks the highest first-quarter growth since 2020.
The first-quarter performance was driven by a recovery in manufacturing and services, and a rebound in external trade, the fastest since 2021, reversing the decline seen for most of 2023.
The Purchasing Managers’ Index (PMI) increased for the second consecutive month in May, reaching 50.3. This marked the fourth positive rise in the first five months of 2024. Industrial production grew by 8.9% year-on-year in May, the third consecutive month of growth in 2024.
Vietnam’s exports expanded for the third consecutive month, with a 15.8% year-on-year increase in May, up from 10.6% in April. Imports picked up by 29.9% year-on-year in May, compared to 19.9% in April.
Year-to-date, exports rose by 16% in May, while imports increased by 18.6%, reversing the negative trend from the same period in 2023.
The trade surplus stood at US$8 billion in January-May, down from US$9.8 billion in the same period last year.
Foreign direct investment (FDI) also showed positive trends, indicating investor confidence in Vietnam’s political stability and competitiveness. Last month FDI inflows edged up by 7.8% year-on-year to US$8.3 billion, the fastest growth in the first five months since 2018, following a record US$23.2 billion in 2023.
Domestic activities are improving, with May retail sales of goods and services up by 8.7% year-on-year, backed by the restaurant and hospitality sector, which grew by 15.1% year-on-year, and tourism, which grew by 45.1% year-on-year.
Despite external risks such as conflicts in Ukraine and the Middle East, Vietnam’s outlook is supported by the recovery in semiconductor demand, stable growth in China and the region, and ongoing shifts in global supply chains.
“Based on the data released so far, we expect GDP growth to accelerate to 6% year-on-year in Q2 2024, extending the 5.66% growth in Q1 2024. We maintain our growth forecast for Vietnam at 6.0% for 2024, aligning with the official target of 6.0%-6.5%,” UOB said in its report.
