Vietnam’s GDP growth slowed to 3.3% YoY in Q1 2023, which was the second lowest Q1 growth since 2011 behind 3.2% YoY growth in Q1 2020. As a result of softer external demand, GDP of the industry/ construction sector fell 0.4% YoY, which was first Q1 decline for the sector over the last decade. Meanwhile, the services sector was the key driver with 6.8% growth, contributing 95.9% to GDP growth in Q1 2023. 

Macro forecast revisions:

- We cut our 2023 GDP growth forecast from 6.5% to 6.0% due to the stronger-than-expected negative impact of the global slowdown on Vietnam's exports and production in Q1 2023. We expect production to remain weak through Q2 2023 and then recover in H2 2023. However, the pace of recovery could be slower than we previously expected given the recent turbulence in the banking sector in the US and Europe. Meanwhile, we maintain our 2024F GDP growth forecast at 7.0%.

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