Analysts have noted that Vietnam's economic growth could be temporarily disrupted during the last two quarters of the year; however, the long-term growth outlook remains very strong.
Impact of Typhoon Yagi: Typhoon Yagi has caused significant damage to the northern economic region of Vietnam, with total estimated losses amounting to 40,000 billion VND (1.63 billion USD). The Ministry of Planning and Investment forecasts that GDP growth in 2024 could decrease by 0.15%, down from the projected rate of 6.8-7%. Although economic growth may face temporary disruption, experts still assert that long-term prospects remain robust.
Economic Growth Forecast: UOB (Singapore) predicts that Vietnam’s growth will slow down due to the impact of natural disasters. Before the typhoon, Vietnam had maintained strong growth, with PMI, manufacturing output, and exports all posting double-digit increases. FDI inflows also reflected optimism, with a likelihood of surpassing 20 billion USD for the third consecutive year.
Temporary Impact of Typhoon Yagi: The effects of Typhoon Yagi will become more evident by the end of Q3 and early Q4 of 2024, causing damage to production, agriculture, and services in northern provinces. However, UOB believes that this impact is only temporary, and the long-term fundamentals remain stable.
Adjusted Growth Forecast: UOB has revised its 2024 growth forecast for Vietnam downward due to the typhoon and other factors. The GDP growth forecast for 2024 has been lowered to 5.9%, still higher than the 5% growth in 2023. In 2025, growth is expected to rebound to 6.6%.
Monetary Policy and Recovery Support: Despite the impacts of Typhoon Yagi, UOB predicts that the State Bank of Vietnam will maintain its refinancing rate at 4.5% and implement targeted support measures. Experts also recommend increasing spending on infrastructure and the real estate market to boost the economy, while emphasizing that exports and the VND/USD exchange rate will remain key factors in the recovery process.
Duy Nguyen compiled from bnews.vn