Standard Chartered predicts slower GDP growth in Q3

Tim Leelahaphan, economist for Thailand and Vietnam, Standard Chartered Bank

The bank’s economists expect a deceleration in retail sales growth to 5.2 per cent on-year, compared to 7.9 per cent in August, and a slowdown in export growth to 6.2 per cent on-year from 14.5 per cent. However, electronics exports may have continued to improve on a year-to-date basis, providing some support to overall export performance. Imports and industrial production are also projected to have grown more modestly, at 4 per cent and 4.2 per cent on-year, down from 12.4 per cent and 9.5 per cent, respectively.

Vietnam’s trade surplus likely moderated to $2.5 billion in September, following a surplus of $4.5 billion the previous month. Despite this slowdown, the country has maintained several months of trade surpluses this year, and the external sector remains relatively robust.

Disbursed foreign direct investment (FDI) rose by 8 per cent on-year in the first eight months of 2024, while pledged FDI increased by 7 per cent, driven largely by the manufacturing sector.

Inflation is projected to have eased to 2.7 per cent on-year in September, down from 3.5 per cent in August. This would mark the second consecutive month of sub-4 per cent inflation, a significant shift from the higher rates seen earlier this year, which were driven by rising prices in education, housing, construction materials, healthcare, food, and transport. These categories, however, could still exert upward pressure on inflation in the coming months.

Tim Leelahaphan, economist for Thailand and Vietnam at Standard Chartered, said, "Credit growth has remained subdued, at 7.4 per cent year-to-date as of September 17, compared to an average of 9 per cent for the same period over 2013-2023. Given recent lower inflation, the appreciation of the VND in the third quarter, and the anticipated economic slowdown, there is now a risk to our forecast of a 50-basis point interest rate hike in the fourth quarter of 2024."