Singapore lender UOB raises Vietnam’s growth forecast to 9.2%

United Overseas Bank (UOB), one of Singapore's largest banks by total assets, has raised its growth forecast for Vietnam's economy to 9.2% in its latest report. This increase in the forecast comes after the General Statistics Office announced a third-quarter GDP growth of 9.95%, marking the fastest growth since the third quarter of 2022 and surpassing the 9% forecasts of both UOB and Bloomberg.

The robust GDP growth in the first nine months of the year resulted in Vietnam's overall GDP growth of 9.01%, solidifying the country's position as the fastest-growing economy in ASEAN. Manufacturing and investment were identified as the primary growth drivers, with industry and construction expanding by 11.21% accounting for 49.62% of the economy's total value added increase.

Electronics, in particular, played a significant role in growth, with computer, electronic products, and components exports reaching around US$111 billion by mid-September. UOB's outlook for the fourth quarter is seen as exceptionally strong, driven by accelerated public investment disbursement. The bank currently offers one of the most optimistic growth forecasts among international institutions, in line with those from Standard Chartered.

In the past two months, both the Asian Development Bank and the World Bank have raised their growth forecasts for Vietnam to 7.8% and 7.4%, respectively. The Vietnamese government aims for a 12.5% GDP growth in the fourth quarter to meet its full-year target of 10%. Authorities have been directed to closely monitor growth scenarios for the final three months, carefully review each growth driver and projection, and eliminate any obstacles to production and business operations.

While the outlook remains positive, UOB has cautioned on potential challenges, including the impact of rising energy prices due to the unresolved Iran conflict and the possibility of stricter U.S. tariffs following the upcoming midterm elections. The Federal Reserve is expected to continue raising interest rates, adding pressure as inflation has exceeded 4.5%, credit growth outpaces deposit growth, and economic growth nears double digits.

To manage liquidity, the State Bank of Vietnam has decided to keep its refinancing rate at 4.5% through the end of 2027 while utilizing open market operations and credit growth limits. The return to a trade surplus, record foreign direct investment inflows, and GDP growth above 9% are expected to continue supporting the stability of the Vietnamese dong, according to UOB.