Vietnam’s economy logged a robust performance in the first half of 2024 and its economic prospects are expected to remain bright during the rest of the year, according to a report recently released by the Singaporean-based United Overseas Bank’s (UOB) Global Economics & Market Research Unit.

Data from the General Statistics Office showed that Vietnam’s real GDP in the second quarter this year improved 6.93 percent over the same period last year.

The country's performance in the second quarter exceeded both the bank's and market expectations of six percent.

It surpassed the 5.87-percent gain in the first quarter of 2024, the 6.72-percent increase in the final quarter of 2023, and the 4.05-percent expansion in the same quarter last year.

During the first half of this year, the Vietnamese economy expanded 6.42 percent, well ahead of the 3.84-percent growth seen in the same quarter of 2023.

“The robust outcome sets a positive tone for the rest of this year after a difficult and challenging 2023,” UOB remarked.

The manufacturing and service sectors continued to make significant contributions to much of the business activities, while external trade maintained its strong pace in the second quarter.

The upturn in semiconductor sales since mid-2023 indicates that this momentum could continue for the next 1-2 quarters.

UOB expects the country's economic outlook to remain bright in 2024, given the strong second-quarter performance that exceeded both its own and market expectations, setting an upbeat tone.

However, the Singaporean lender cautioned that the second half of this year could see a more muted performance, due to the higher base in the second half of 2023 as well as external headwinds such as the conflicts between Russia and Ukraine and in the Middle East which could disrupt global trade and energy markets.

Nonetheless, Vietnam’s economic prospects are expected to be bolstered by the recovery in the semiconductor cycle, stable growth in China and the region, and the likely easing of monetary policy by major central banks.

UOB reaffirmed its growth forecast for Vietnam at six percent for 2024, while the Vietnamese government’s growth target is at 6.0-6.5 percent.

The bank added that the revival of domestic spending has put additional pressures on consumer prices, which saw Vietnam’s headline consumer price index (CPI) accelerating for the fifth consecutive quarter to 4.39 percent year on year in the second quarter, compared to 3.77 percent in the first quarter.

Contrary to the headline inflation, the core CPI, which excludes the prices of food, energy, and state-controlled goods like education and medical services, slowed down for the fifth quarter to 2.69 percent year on year.

The headline inflation was attributed to food and housing cost increases, particularly due to rising costs of pork, electricity, healthcare, and education services.

The country’s plan to raise the minimum wage by six percent from July this year could also affect inflation, the bank said.

Earlier, the Asian Development Bank forecast that Vietnam’s economy could achieve a growth rate of six percent in 2024 and 6.5 percent in 2025.

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