UOB Forecasts Vietnam's Full-Year GDP Growth at 5.2%

UOB has recently revised its full-year growth projection for Vietnam, downgrading it to 5.2% due to anticipated challenges, particularly in the fourth quarter of 2023. The bank faces difficulties in surpassing its initial projection of 6% due to lower-than-targeted growth in the first half of 2023.

The fourth quarter poses a particular challenge for UOB as it reported strong earnings during the same period last year. Therefore, the third quarter of 2023 becomes crucial, as it traditionally experiences increased production and exports in preparation for year-end festive demand in developed markets.

Recent data released by the General Statistics Office showed that Vietnam’s real GDP growth rate in the second quarter of 2023 accelerated to 4.14% year-on-year, surpassing the downwardly revised 3.28% year-on-year growth in the first quarter. However, it fell short of the projected 5.9% growth.

The tepid performance of Vietnam’s economy in the first half of 2023 can be attributed to weaknesses in manufacturing and external demand. The economy expanded by 3.72% year-on-year in the first half, significantly lower than the 6.46% pace in the same period last year and the official growth target of 6.5%.

In terms of sectoral performance, the manufacturing sector, which accounts for about 34% of the economy, experienced a slight gain of 1.1% year-on-year in the first half of 2023 after contracting in the third quarter of 2021. On the other hand, the services sector, representing 43% of the economy, managed to offset some losses from the external sector by growing 6.1% year-on-year in the second quarter and continuing its 6.6% year-on-year growth from the first quarter. The services sector contributed 2.7 percentage points, or over 60% of the overall growth in the first half of 2023.