Vietnam 2023 economic outlook

Richard Burrage
Oct 06, 2023

Vietnam Q3 2023 economic growth improved, with GDP reaching 5.3%.  The full-year Vietnam 2023 economic growth forecast is now 4.7%.

Vietnam Q3 2023 Economic Outlook

Vietnam export demand: When will strong demand be back?

Economic growth exists, but it is not at 2019 levels. The economy has now bottomed and is turning back into its 2019 trajectory. Growth will be back in full swing by Q4 2024. Business confidence faltered in October 2022. It is showing improvement as of August 2023. Vietnam CEO Pulse Business Confidence 2023

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Export markets were hit by overstocking and lower-than-expected consumer demand post-Covid. The supply chain hangover created very high inventory levels that are now finally diminishing enough to see orders re-start. Exports will slowly build henceforth. There will be no surge. Unfortunately, inventories needed to reduce more, in time to see orders for 2023 Christmas and 2024 New Year shopping.

Vietnam manufacturing saw new orders rise in September 2023, supported by a solid increase in exports.

Vietnam Manfacturing Purchasing Managers Index 2023Manufacturing output fell despite sustained growth of new orders in September 2023. Underlying data pointed to a strengthening demand environment and growing business confidence, but also a degree of spare capacity in the sector, which led to reductions in output and employment. Panel respondents signalled that strength in new export orders, particularly from other Asian economies, had helped to boost total new business. The rate of expansion in new sales from abroad was solid and more pronounced than that seen in August.  The Vietnam Manufacturers Purchasing Managers Index is conducted by Cimigo and compiled by S&P Global.

Vietnam consumer demand: When will strong demand be back?

Consumer confidence faltered in April 2023. Retail sales have grown 10% year-to-date in September, over the same period in 2022. Beyond the diminished consumer confidence, many blue-collar roles have lost overtime hours (and jobs) owing to the aforementioned manufacturing woes.  Higher interest rates have further dented consumer lending, credit purchases and household income. Vietnam Retail Sales 2023

Vietnam consumer spending has undergone a behavioural shift to thrift.

  1. Vietnam consumers delayed or halted high-ticket value purchases.
  2. Vietnam consumers reduced discretionary entertainment expenditure.
  3. Vietnam consumers increased savings.
  4. Vietnam shoppers for consumer goods sought value and steered away from premium products. Shoppers have spurned premium propositions. Their thrift impacts necessities such as a carton of milk as much as it does more discretionary spending.
  5. Winners in this market have found stability or limited growth through a strong value proposition.

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Vietnam sees a shift to thrift and back again.

Cimigo expects a slow, steady revival over the coming 12 months. Inflation is under pressure. Interest rates will rise again in 2024 to counter a primarily imported inflationary pressure. The State Bank of Vietnam will continue to exert pressure to lend. The central government’s pressure on provincial authorities’ infrastructure expenditure will assist the economy.

2024 business budgets and expectations will be more realistic, i.e., not against a 2022 rebound.

Cimigo expects business confidence to recover in Q1 2024, consumer confidence to recover in Q3 2024 and growth to be back in full swing by Q4 2024.

You can learn more about the Vietnam 2023 economic outlook and the prospects for Vietnam’s consumer demand growth here.

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