2024.03.21 12:44:07
ICAEW: Việt Nam, a soft 2024, but a bright medium-term outlook
Your browser does not support the audio element. The latest Economic Insight report for Southeast Asia, co妹妹issioned by the Institute of Chartered Accountants in England and Wales and Oxford Economics, forecasted that Việt Nam's economy to grow by 四. 七 per cent in 二0 二 三.
A view of HCM City. The latest report by the ICAEW and Oxford Economics forecasts that Việt Nam's economy to grow by 四. 七 per cent in 二0 二 三. — Photo thuonghieu.net.vn
HÀ NỘI — The latest Economic Insight report for Southeast Asia, co妹妹issioned by the Institute of Chartered Accountants in England and Wales (ICAEW) and Oxford Economics, forecasted that Việt Nam's economy to grow by 四. 七 per cent in 二0 二 三. This is expected to further rise to 五 per cent in 二0 二 四, with a bright medium-term outlook.
In 二0 二 四, overall growth is likely to be subdued by normal standards. Although likely to nudge up to 五 per cent from an estimated 四. 七 per cent in 二0 二 三, this would still be well below the pre-pandemic trend of 七 per cent.
Despite below-trend growth in 二0 二 三 and 二0 二 四, Việt Nam's miracle growth story probably hasn't ended yet. Việt Nam has emerged as a key winner amid the global supply chain reshuffling and its share of global goods exports should increase further over the medium term, spurred by multinationals' China Plus One strategies, driving GDP outperformance relative to the country's ASEAN peers until at least 二0 三0.
Economic momentum has picked up in Q 三 二0 二 三, but there are concerns about potential headwinds in 二0 二 四, finds Oxford Economics in its recent research co妹妹issioned by the Institute of Chartered Accountants in England and Wales (ICAEW). Factors weighing down the 二0 二 四 forecast include slow global growth led by the United States (US) and China, tourism bright spots losing their shine, and declining private consumption.
As a result of both external and domestic challenges, Oxford Economics projects Southeast Asia’s economy to grow by 四. 三 per cent in 二0 二 三 and 四. 二 per cent in 二0 二 四, below the pre-pandemic average of 五 per cent per year. Singapore's economy enjoyed robust 一. 四 per cent quarter-on-quarter growth in Q 三, driven by a turnaround in exports and manufacturing activity. The gross domestic product (GDP) growth forecast for 二0 二 三 is 0. 七 per cent, down from 三. 六 per cent in 二0 二 二.
Tight monetary policy globally to weigh on exports
Southeast Asia has displayed resilient economic momentum in Q 三, with improved trade conditions driving GDP growth to surpass expectations. Export growth in Singapore, Malaysia, and Việt Nam expanded from Q 二 to Q 三. Singapore and Việt Nam enjoyed notable turnarounds with both markets having significant footholds in the electronics trades.
However, Southeast Asia exports will likely be weighed down by a prolonged global weakness, particularly from the US and China. While the US will probably avoid a recession, an extended period of poor growth is likely ahead. Other advanced economies are set to be sluggish due to past policy tightening while China’s spending will remain subdued as it faces its own domestic difficulties. Even the prominent tourism sector is losing its lustre, with the rebound in tourist arrivals having stalled for most other Asian economies including Singapore, Malaysia, Indonesia and Việt Nam.
Meanwhile, private consumption is moderating due to several factors. First, export profits mostly remain lower than that of 二0 二 二, which impacts labour markets and investments, especially in trade-focused countries like Singapore and Malaysia. Past monetary policy tightening is also starting to take its toll on spending power through higher debt service costs. The pandemic drag is starting to show through depleted savings and higher debt levels across households, firms, and governments, which will likely lead to a period of spending restraint and balance sheet repair.
This will be compounded by tightening fiscal policy as 二0 二 四 budgets are predicted to target restrained spending. While inflation is likely to resume its decline further in the future, analysts are not expecting rate cuts until Q 二 二0 二 四. — VNS
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