Vietnam Economic Outlook Brighter in H2, 2023

9:20:30 AM | 3/13/2023

The Vietnamese Ministry of Foreign Affairs and Standard Chartered Bank (SCB) recently jointly organized the Seminar on “Global Economic and Financial Outlook Update 2023: Implications for Vietnam” in Hanoi. The event brought together more than 150 delegates, including representatives of the National Assembly, the Government, provinces and cities, ambassadors and representatives of embassies, international organizations, businesses, senior specialists of Standard Chartered Bank and many domestic and foreign economists.

Speakers at seminar on “Global Economic and Financial Outlook Update 2023: Implications for Vietnam”

Assistant Minister of Foreign Affairs Nguyen Minh Hang affirmed that, given rapid and complicated global economic development, with both opportunities and challenges in place, Vietnam continues to give priority to maintaining macro stability; ensuring the economic balance; building an independent and self-reliant economy assisted by active global integration; and sustainable development. Vietnam continues to be one of the growth outperformers in the Asia-Pacific region and the world. She asked experts to clarify economic scenarios of the world and Vietnam in 2023; identify opportunities and challenges that Vietnam needs to capture; identify and recommend measures to promote new growth drivers, thus helping the government, ministries, sectors, localities and businesses to capture and assess ongoing trends for regulating macroeconomic performances as well as building production and business plans.

The seminar concentrated on three main topics: Global economic outlook, Vietnam’s economic outlook and Forex market outlook in 2023. Mr. Edward Lee, Chief Economist for ASEAN and South Asia at Standard Chartered Bank, the start of 2023 has been more positive than expected. The U.S. economy is recovering, the Eurozone has avoided a harsh winter, and China is reopening faster than expected. However, the global economy will face certain risks. In the second half of the year, the world economy is forecast to bottom out and begin to recover, creating momentum for manufacturing and growth. Global growth was forecast at 2.5% for the year (versus the forecast of 3.4% in 2022). Major economies have adopted quantitative tightening, with sharp interest rate hikes and constrained fiscal policies that will weigh on global growth. Moreover, while inflation is expected to be moderate, it will still be higher than pre-Covid levels. This will be detrimental to domestic consumption. Global trade volumes have declined since the end of last year, suggesting that external demand is slowing.

Madam Michele Wee, CEO of Standard Chartered Bank Vietnam, addresses the event

Regarding Vietnam's economic outlook, Mr. Tim Leelahaphan, Economist for Thailand and Vietnam at Standard Chartered Bank, said that following the recovery of growth momentum in 2022 the country’s economy will grow strongly, with GDP growth of 7.2% in 2023 and 6.7% in 2024. Inflation is expected to rise by about 6% in 2023. While the trade balance will be better, there will be some global challenges for exports. Vietnam continues to face some macro risks in the first half of 2023, such as inflation, public debt, and revived confidence but prospects for recovery in the second half are positive. Vietnam’s medium-term outlook remains sound, and it will continue to be an important link in global supply chains and a preferred destination for many businesses.

Regarding the outlook on the foreign exchange market, Mr. Divya Devesh, Head of Research for ASEAN and South Asia, said, the world now needs to pay attention to two factors. First, USD is still a high-yield currency and affects global foreign exchange. The U.S. economy is likely to face a recession although there are currently positive signals. Challenges may reemerge at the end of 2023.

The seminar, chaired by Mr. Nguyen Xuan Thanh, independent and non-executive member of the Board of Directors of Standard Chartered Bank Vietnam, was attended by economic experts, officials and businesses. Speakers discussed opportunities and challenges for Vietnam's growth and macro stability (inflation, China's reopening, new mechanisms and initiatives such as CBAM, and global minimum tax); identified solutions to boost growth drivers (exports, consumption and investment) and new growth drivers; recommended policies to promote sustainable economic development. Ambassador and Head of the EU Delegation to Vietnam, Deloitte leaders and many economic experts emphasized that Vietnam needs to boost green trade and comprehensively support sustainability goals in the context of accelerating digital transformation. Green transformation associated with environmental criteria is a mandatory trend for most countries. Therefore, Vietnamese enterprises need to take appropriate preparatory steps to catch up with this inevitable trend (changing thinking, changing governance, building green export strategies).

“Vietnam has medium and long-term development prospects that offer growth potential and investment attraction. Vietnam is playing an increasingly important role in international trade and global supply chains. As a leading international bank, we will strive to support Vietnam’s sustainable recovery and growth in 2023 and the years to come,” said Madam Michele Wee, CEO of Standard Chartered Bank Vietnam. “We are very pleased to cooperate with the Ministry of Foreign Affairs to organize today's event and share comments and perspectives to contribute to the common effort to build a prosperous and sustainable Vietnam.”

The seminar was part of Standard Chartered Bank’s efforts to assist Vietnam’s sustainable development and the business community. This was also one of the activities of the Ministry of Foreign Affairs to implement the Government's Action Plan for implementation of Directive 15 of the Secretariat on Economic Diplomacy in order to advise and provide information to central agencies, localities and businesses.

Le Hien, Vietnam Business Forum