Vietnam: Strong GDP but rising inflation risks – Commerzbank
Commerzbank Research highlights Vietnam’s Q3 GDP growth at 10.0% year-on-year, the strongest since the pandemic, driven by investment and industry. Achieving the government’s 10% full-year target would require an unusually strong Q4.
Vietnam's economy experienced a robust third quarter (Q3) growth of 10.0% year-on-year, marking the strongest expansion since the pandemic, according to Commerzbank Research. This achievement, surpassing the Bloomberg consensus of 8.7%, was driven by investment and industry, with the services sector expanding by 9.5% and construction growing by 12.2%.
However, rising inflation risks loom as the September Consumer Price Index (CPI) reached 5.1%, exceeding the target of 4.5% on average. The elevated oil prices and rapid credit growth have limited the State Bank of Vietnam's (SBV) capacity to provide further monetary support. For the government's full-year target of 10% to be met, the Q4 growth needs to surge by an unprecedented 12.5%.
Despite this challenge, growth momentum is expected to persist into Q4, potentially increasing demand-side price pressures.
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