According to the Asian Development Outlook (ADO) July 2023 released on July 19, weak external demand continued to put pressure on manufacturing and industrial production, while domestic conditions are expected to improve moving forward. Indeed, inflation is forecast to slow to 4.0% in 2023 and 2024. 

ADB is not the sole organisation to lower its economic growth forecast for Vietnam this year. According to July’s HSBC report “Vietnam at a glance”, the bank also revised its growth forecast for Vietnamese GDP to 5% this year.

The World Bank (WB) has cut its Vietnamese GDP growth forecast this year to 6% in its June edition of “Global Economic Prospects”, representing a drop of about 0.3% compared to the prediction that the lender made in January.

Most notably, in its June edition’s Vietnam Macro Monitoring, the WB also points out that continued weak external demand coupled with global uncertainties are adversely affecting the Vietnamese economy, translating into contraction in both imports and exports, as well as a slowdown in industrial production.

In the latest ADO report, the ADB is maintaining its growth outlook for developing economies in Asia and the Pacific at 4.8% for this year, as robust domestic demand continues to support the region’s recovery.

Inflation occurring in developing Asia is forecast to stay at 3.6% this year, compared with an April forecast of 4.2%. Meanwhile, the inflation outlook ahead for 2024, has been raised to 3.4% from an earlier estimate of 3.3%.

According to the Asian Development bank, China’s decision to reopen its economy to the world is bolstering the region’s growth. The world’s second largest economy is projected to expand by 5.0% this year, unchanged from the April forecast, amid strong domestic demand occurring in the services sector.

However, demand for developing Asia’s exports of electronics and other manufactured goods is slowing, as monetary tightening drags on economic activity in major advanced economies. In addition, the region’s growth forecast for next year has been marginally revised down to 4.7% from a 4.8% estimate in April.

“Asia and the Pacific continues to recover from the pandemic at a steady pace,” said Albert Park, chief economist of the ADB.

“Domestic demand and services activity are driving growth, while many economies are also benefiting from a strong recovery in tourism. However, industrial activity and exports remain weak, and the outlook for global growth and demand next year has worsened,” he added.

ADB is maintaining its growth forecasts for most sub-regions in Asia and the Pacific. Exceptions include Southeast Asia, where the outlook has been lowered to 4.6% this year and 4.9% next year, compared with April estimates of 4.7% and 5.0%, respectively. The forecast for Caucasus and Central Asia is being revised down marginally to 4.3% from 4.4% for 2023, and to 4.4% from 4.6% in 2024.

Source: VOV