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Vietnam is feeling the coronavirus impact mostly via its supply chain, affecting manufacturing growth.  Economists at Standard Chartered Bank have updated the Vietnamese economic forecast.

Key quotes

“We lowered our 2020 growth forecast to 6.6% from 7% previously to reflect this slowdown; Q1 growth is likely to slow to 4.5% y/y, before rebounding in H2.” 

“We expect the government to implement growth-supportive fiscal measures, likely towards accelerated disbursement of funds for public investment, and measures to facilitate FDI inflows including tax incentives.” 

“We forecast that inflation will pick up further in 2020, averaging 5.3% y/y versus 2.8% in 2019.”

“We believe the State Bank of Vietnam (SBV) will remain accommodative near-term to support growth, despite higher inflation. Having eased policy pre-emptively in end2019, the SBV is likely to stay on hold through 2020. However, we see the risk of further easing if growth slows more than we expect, closer to 6%.”