Bloomberg’s latest survey shows that the refinancing interest rate, currently at 4.5 percent, is seen to stay on hold through 2025, in the backdrop of a rebound in gross domestic product growth backed by strong exports. The rate was cut thrice between April and June last year to 4.5 percent from a peak of 6 percent.
In a previous survey, economists had expected a further 50 basis points of cuts during the current January-March period.
Analysts also raised their headline inflation forecasts for 2024, now expecting price gains at 3.6 percent this quarter and at 4.05 percent in the next, up 0.7 percent and 0.75 percent compared to the same periods last year, respectively.
They expect the annual inflation to average a faster 3.5 percent this year from 3 percent earlier, before easing to 3.2 percent in 2025. The 2024 level is still below the government’s targeted range of 4 percent-4.5 percent.
According to Bloomberg, the SBV is likely to keep the policy interest rate unchanged in the coming time, and this means that the heavy lifting — of returning economic growth to above 6 percent by attracting investors and encouraging spending - will be left to the government.
The Vietnamese economy is likely to grow 6.3 percent in the first quarter, and 6.5 percent in the April-June period. Vietnam’s GDP growth is forecast at 6percent for this year, and 6.4 percent next year, said Bloomberg’s survey.
Han Teng Chua, an economist at DBS Bank Ltd, said Vietnam’s economy is recovering, adding that foreign direct investment is likely to remain forthcoming, with Vietnam staying attractive over the coming years, as companies diversify and derisk their supply chains by expanding into the Southeast Asian country.
Competitive wage costs, a wide network of trade agreements and supportive business environment are key advantages for the Vietnamese economy, he stated.
