The website Bloomberg.com of the US on January 8 cited analysts' opinions, saying that the State Bank of Vietnam (SBV), among the first in Asia to lower borrowing costs in 2023, willl likely keep its benchmark interest rate steady through next year as it tackles economic growth and inflation concerns.

A factory in the Du Long Industrial Park in Thuan Bac district, Ninh Thuan province. - Illustrative image (Photo: VNA)

Bloomberg’s latest survey shows that the refinancing interest rate, currently at 4.5%, is seen to stay on hold through 2025, in the backdrop of a rebound in gross domestic product growth backed by strong exports. The rate was cut thrice between April and June last year to 4.5% from a peak of 6%.

In a previous survey, economists had expected a further 50 basis points of cuts during the current January-March period.

Analysts also raised their headline inflation forecasts for 2024, now expecting price gains at 3.6% this quarter and at 4.05% in the next, up 0.7% and 0.75 % compared to the same periods last year, respectively.

They expect the annual inflation to average a faster 3.5% this year from 3% earlier, before easing to 3.2% in 2025. The 2024 level is still below the government’s targeted range of 4%-4.5%.

According to Bloomberg, the SBV is likely to keep the policy interest rate unchanged in the coming time, and this means that the heavy lifting — of returning economic growth to above 6% by attracting investors and encouraging spending - will be left to the government.

The Vietnamese economy is likely to grow 6.3% in the first quarter, and 6.5% in the April-June period. Vietnam’s GDP growth is forecast at 6% for this year, and 6.4% next year, said Bloomberg’s survey.

Han Teng Chua, an economist at DBS Bank Ltd, said Vietnam’s economy is recovering, adding that foreign direct investment is likely to remain forthcoming, with Vietnam staying attractive over the coming years, as companies diversify and derisk their supply chains by expanding into the Southeast Asian country.

Competitive wage costs, a wide network of trade agreements and supportive business environment are key advantages for the Vietnamese economy, he stated.