Standard Chartered forecasts rising inflation as Việt Nam maintains strong growth outlook

Standard Chartered forecasts rising inflation as Việt Nam maintains strong growth outlook

The bank believes inflation will increase to 3.8 per cent year-on-year in February, up from 3.6 per cent in January 2025.

People shop at a supermarket. Photo thoibaotaichinh.vn

In its latest macroeconomic update about Việt Nam, Standard Chartered Bank forecasts a rise in inflation in the near term. 

The bank believes inflation will increase to 3.8 per cent year-on-year in February, up from 3.6 per cent in January 2025.

This would mark the seventh consecutive month of inflation remaining below 4.0 per cent year-on-year. However, Standard Chartered economists anticipate the recent upward reversal since December to continue in February; any moderation would be only temporary. Demand-driven factors may contribute to further inflationary pressure in the near future.

The Vietnamese government has raised its 2025 growth target to at least 8 per cent (from 6.5-7 per cent), with a higher inflation expectation of 4.5-5.0 per cent to create room for monetary policy flexibility.

The stronger growth outlook could help sustain low interest rates in the short term. However, Standard Chartered expects the State Bank of Việt Nam (SBV) to raise interest rates by 50bps in Q2-2025 in response to rising inflation.

Retail sales growth is likely to ease to 8.2 per cent year-on-year in February, down from 9.5 per cent in January, according to Standard Chartered economists.

Meanwhile, export growth may rise to 23.2 per cent year-on-year, supported by a low base and continued improvements in electronics exports. Imports and industrial production likely grew 24.0 and 6.2 per cent year-on-year respectively. However, Việt Nam’s monthly trade surplus may narrow to US$1.5 billion, down from $3 billion.

Tim Leelahaphan, Senior Economist for Thailand and Việt Nam, Standard Chartered Bank, said: “We stay cautious on the near-term economic outlook, as January’s macro indicators showed a moderation in both domestic and external data.

"Uncertainties around US trade policies also pose potential risks, given Việt Nam’s large trade surplus with the US. In response, Việt Nam has indicated its willingness to import more US agricultural products.” 

Bizhub