Standard Chartered Bank continued to lower its growth forecast for Vietnam in 2021 from 4.7% to 2.7%, after the growth in the Quarter 3 fell by 6.2% compared to the same period last year. The economic recovery was accessed to accelerate in 2022 and maintain its growth forecast for next year at 7%.
Mr. Tim Leelahaphan, Economist of Standard Chartered Bank in charge of Thailand and Vietnam shared that the economic growth is likely to recover in Quarter 4, 2021, however, it depends on enterprises reopening process. “Though the growth is expected to be accelerated in the post-pandemic, we keep a cautious view until signs of recovery become clearer. The ability to control the Covid-19 will affect the short-term outlook,” said Tim Leelahaphan.
Standard Chartered economists forecast that the State Bank of Vietnam will keep the policy rate at 4% to support credit growth and remain cautious with inflation risks impacted by supply factors.
According to the bank, it might reduce its forecast level and the interest rate if the effects of the Covid-19 on the economy is beyond October which may affect to Vietnam’s trade position.
The prolonged pandemic along with the long-term application of prevention measures may cause short and long-term impacts on the economy, thereby causing consequential risks such as rising inflation and shrinking fiscal space. However, Vietnam’s trade position continues to remain strong in both the short and medium terms.