Vietnam's GDP forecast lowered amid global policy uncertainty
The Organisation for Economic Co-operation and Development (OECD) forecasts Vietnam’s economic growth at 6.2% this year and 6% next year.
Several international institutions have lowered Vietnam’s economic growth forecast from around 7% to between 6% - 6.2 % in 2025, due to global policy uncertainty and slowing exports on escalating trade tensions.
The Organisation for Economic Cooperation and Development (OECD) forecast Vietnam’s economic growth at 6.2% this year and 6% next year.
Despite the downward revision, Vietnam remains among the economies with the most positive prospects in the year ahead, with a forecast still significantly higher than for other countries in the region, driven by robust private consumption and public investment, according to the OECD.
However, a volatile global trade environment is expected to weigh on overall momentum.
Vietnam's fiscal policy would continue to support growth through hastening public investment, the OECD said, warning of emerging inflation pressure that might prompt a shift to a more neutral fiscal setting.
The State Bank of Vietnam maintained an expansionary monetary policy from June 2023, including rate cuts and credit growth targets. While this was expected to continue, the OECD urged a close watch on inflation risk stemming from planned hikes in pensions and minimum wages.
Meanwhile, in a recent report about the Vietnamese economy, Singapore-based United Overseas Bank (UOB) pointed out that the Vietnamese dong had depreciated notably since the US announced new reciprocal tariff measures in early April.
The State Bank of Vietnam would consider loosening monetary policies, but the depreciation of the Vietnamese dong remained a concern.
UOB expects the central bank to hold its refinancing rate steady at 4.5%. A return to pre-pandemic rates of 4% or lower would be possible if the labour market weakens and the forex exchange market stabilises, UOB noted.
The bank also lowered Vietnam’s growth forecast to 6% in 2025, down from an earlier projection of 7%./. Source: VNS