Standard Chartered Bank’s latest macroeconomic update on Vietnam forecasts a rise in inflation, expecting it to increase to 3.8 percent year-on-year in February, up from 3.6 percent in January.

This marks the seventh consecutive month inflation has remained below four percent, but economists anticipate a continued upward trend from December, with demand-driven factors potentially adding inflationary pressure.

The Vietnamese government has raised its 2025 growth target to at least eight percent from a previous forecast of 6.5-7 percent, along with a higher inflation target of 4.5-5 percent, to facilitate more flexible monetary policies. 

This stronger growth outlook could help sustain low interest rates in the short term, though Standard Chartered expects the State Bank of Vietnam to raise rates by 50 basis points in the second quarter of 2025 in response to rising inflation.

Retail sales growth is likely to ease to 8.2 percent year-on-year in February, down from 9.5 percent in January, while export growth may rise to 23.2 percent, driven by a low base and stronger electronics exports. 

Imports and industrial production are projected to grow by 24 percent and 6.2 percent year-on-year, respectively, though Vietnam’s monthly trade surplus is expected to narrow to US$1.5 billion, down from $3 billion.

“We remain cautious on the near-term economic outlook, as January’s macro indicators showed moderation in both domestic and external data,” Tim Leelahaphan, senior economist for Thailand and Vietnam at Standard Chartered, said. 

“Uncertainties surrounding U.S. trade policies also pose risks, given Vietnam’s large trade surplus with the U.S. 

“In response, Vietnam has shown a willingness to import more U.S. agricultural products.”

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