GDP growth reached the second highest level in five years. According to the General Statistics Office of Vietnam (GSO), Vietnam’s GDP increased 7.4% YoY in Q3 2024, bringing GDP growth in 9M 2024 to 6.8% YoY. The GDP in Q3 and 9M 2024 experienced the second highest Q3 and 9M growth in five years (only lower than 13.9% YoY growth in Q3 2022 and 9.0% YoY growth in 9M 2022, which were boosted by a low base effect from the COVID pandemic). Among the three main sectors, industry & construction recorded the highest growth at 9.1% YoY in Q3 2024 and 8.2% YoY in 9M 2024 (Q3 2023: +5.2% YoY & 9M 2023: +2.4% YoY), contributing 46.2% to overall growth.

We raise our 2024 GDP growth forecast to 6.9% from 6.5% due to the higher-than-expected recovery in production and exports in 9M 2024. We expect economic growth in Q4 2024 to be supported by: (1) continued recovery in trade and production, which stimulates consumption; (2) Government policy support measures (e.g., extended VAT cuts, fee reductions, a 30% hike in the public sector’s base salary, among others); (3) solid FDI disbursement; and (4) a gradual recovery in real estate & construction activity. We also nudge up our credit growth forecasts for 2024-26F (details on page 16) and adjust our policy rate forecasts to one increase in 2025F (vs our previous forecast of one increase in each of 2024F and 2025F), following the significant easing in USD interest rates around the Fed’s recent 50bp policy rate cut and recovery in the VND vs the USD.

Powered by Froala Editor