Vietnam’s GDP growth forecast for 2023 has been lowered by 0.7 percentage points to 6.5% by Standard Chartered.

The forecast the bank made in January of 7.2% was revised after taking into account external factors more carefully, with a slowdown in the country’s macro indicators over the past four months.

VN Express reports that exports have fallen by 11.8% year-on-year, whilst the country’s trade surplus stands at $6.4 billion. 

In addition, inflation for April was 2.8%, the third straight month of declines. However, core inflation stood at 4.6% as retail sales rose 11.5%. Foreign Direct Investment fell by 17.9% to $8.9 billion, whilst imports edged down by 15.4% year-on-year.

“Vietnam imports a lot, so import indicators going down considerably shows that economic activity is slowing down despite strong domestic consumption,” according to Tim Leelahaphan, the bank’s economist for Thailand and Vietnam.

Furthermore, several other global financial institutions have downwardly revised their Vietnam growth forecasts. The World Bank has lowered its forecast from 6.7% to 6.3%, the IMF from 6.2% to 5.8%, and the ABD from 6.7% to 6.5%.

Impacting Vietnam’s economic growth in 2023 will likely be the global economic downturn, increasing commodity prices, geopolitical issues and monetary tightening in developed countries.

Vietnam’s government has set a growth target of 6.5%, but challenges remain, with GDP only growing by an annualised 3.32% in Q1.

Minister of Planning and Investment Nguyen Chi Dung expressed concern over growth during a recent meeting, saying the economy needs to grow at 6.7%, 7.5% and 7.9% in the next three quarters in order to hit the target.

Standard Chartered forecasts the State Bank of Vietnam would lower the refinancing rate by 0.5 percentage points to 5% by the end of Q2 and hold that rate until the end of 2025.