MOIT VIETNAM | Bloomberg Predicts a Bright Future for Vietnam's Economy in 2024
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Bloomberg Predicts a Bright Future for Vietnam's Economy in 2024
On January 8, Bloomberg.com (USA) cited analysts' predictions that Vietnam's central bank will be able to maintain its benchmark interest rate unchanged in 2024. When it comes to cutting interest rates on loans in 2023, the State Bank of Vietnam is among the earliest Asian central banks to do so.
With exports seeing a significant uptick, the most recent Bloomberg survey predicts that the refinancing rate, which is now at 4.5%, will stay unchanged until 2025, coinciding with a rebound in GDP growth.
From its highest point of 6% to 4.5%, this rate will be reduced three times between April and June of 2022.
According to an earlier poll, economists expected the State Bank of Vietnam to cut rates by another 50 basis points in Q1 2024.
The new general inflation forecasts released by analysts for 2024 predict price increases of 3.6% in Q1 2024 and 4.05% in Q2 2024 (up from 2.9% and 3.3% in Q1 2023 and Q2 2023, respectively).
The consensus among economists is that inflation will peak at 3.5% in 2024 (up from 3% in 2023) and then decline to 3.2% the following year. By 2024, inflation will have fallen short of the government's 4- to 4-and-a-half percent target.
Bloomberg reports that the State Bank of Vietnam will most likely maintain the current operating interest rate going forward. For the government, it's all about "getting the economy back to above 6% growth by attracting investors and encouraging spending." Pretty heavy lifting, my friend.
The aforementioned poll indicates that first-quarter 2024 GDP growth for Vietnam will be 6.3% and second-quarter 2024 GDP growth will be 6.5%. The government projects a GDP growth rate of 6.4% in 2025 and 6.4% in 2024.
An economist from the Development Bank of Singapore (DBS Bank), Mr. Han Teng Chua, has stated that the Vietnamese economy is on the mend.
Vietnam is expected to attract a steady stream of foreign direct investment (FDI) in the years to come. This is because companies are looking to diversify their supply chains and lower supply chain risks by expanding their production operations to Vietnam.
Important advantages for the Vietnamese economy include competitive wage costs, a favorable business environment, and an extensive network of trade agreements./.
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