Vietnam: External headwinds likely to weigh on growth – Standard Chartered

Lower global demand amid deep recessions in the US, euro area and other G10 economies is likely to weigh on Vietnam’s growth in 2020, according to economists at Standard Chartered Bank. USD/VND is sitting at 23,335.50.

Key quotes

“Lower global demand on slower US, euro-area and China growth to weigh on externally dependent sectors. We expect growth to drop to a multi-year low of 1.7% y/y in 2020, before rebounding to 7.8% in 2021.”

“We now expect a further 50bps of rate cuts in Q3, in addition to 150bps of rate cuts YTD, taking the rate to a multi-year low of 4% in 2020; we previously forecast 5%.” 

“We expect core inflation (excluding prices of food, energy, health care and education services) to remain subdued, rising mildly to 3% by end-2020.”