Vietnam: Will Strong Growth Continue Into 2027? – Standard Chartered

Vietnam’s growth outlook remains strong despite expectations of above-target inflation and eventual monetary tightening, according to Standard Chartered’s Tim Leelahaphan. He forecasts GDP growth of 9.5% in 2026 and 11.0% in 2027, and has increased his 2028 projection to 9.1%. After remaining above the government’s 4.5% target in the near term, headline inflation is expected to drop below it in Q2-2027. Gradual monetary tightening is expected to begin in Q4-2027.

Can High Growth Continue Alongside Gradual Policy Tightening?

"We maintain our GDP growth forecasts of 9.5% for 2026 and 11.0% for 2027. We raise our 2028 forecast to 9.1% (from 6.7%), given the government’s continued commitment to high growth, supported by fiscal and monetary policy, robust FDI inflows and stronger domestic demand."

"We forecast Q4-2026 growth at 10.7% y/y (2.7% q/q seasonally adjusted), as the government is likely to push for stronger growth before year-end; this would translate into 10.4% y/y growth in H2 (H1: 8.5%). We expect growth to remain in double digits in early 2027 as momentum continues."

"We raise our headline inflation forecasts to 4.7% from 2026 (4.4% previously) and 3.9% in 2027 (3.3%), following recent higher-than-expected monthly prints. We lower our 2028 forecast to 3.7% (5.5%), as we expect gradual monetary policy tightening to help contain price pressures and keep inflation below the government’s 4.5% target."

"Near-term, we see headline inflation staying above the target, at 5.2% y/y in Q4-2026 and 4.6% in Q1-2027, partly due to a low base. We expect it to fall below target in Q2-2027 to 3.3%, partly because of a higher base, allowing the State Bank of Vietnam (SBV) to stay relatively accommodative."

"Still, we now expect the refinancing rate to be raised by 25bps (to 4.75%) in Q4-2027 and another 25bps (to 5.00%) in Q4-2028. This would represent gradual normalisation, as we think the authorities will continue to prioritise growth over price stability well into 2027."

"We therefore continue to expect relatively accommodative monetary policy, stronger economic growth and elevated inflation in 2027. GDP growth and headline inflation are likely to moderate in 2028, when the State Bank of Vietnam (SBV) may re-tighten policy as it shifts its focus further towards stability."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)