VIETNAM MACRO SNAPSHOT
AUGUST 2023

In August, the domestic economy continued to record clearer signs of improvement, although challenges have been going on.

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On the positive side, the term-deposit interest rates at most commercial banks continued to decrease by an additional 0.5%-0.7% per year in this month. This may enable commercial banks to offer further declines in lending interest rates in line with the Government's direction.

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Additionally, the export of several merchandise categories indicated positive signals (especially rice, vegetables & fruits). Total export value in August was 17% higher than the average record in preceding months. Besides, the export value of electronics and components also suddenly recovered strongly to the highest record ever. The orders for garments, footwear, wood, and processed seafood have been on rise. Accordingly, the accumulated trade surplus in the first 8 months of the year has peaked at $20.19 billion.

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The retail sales of some specific product categories such as educational items and household appliances soared significantly, despite total domestic consumption has still slowed down. As a result of positive export & domestic sales, productivity of many manufacturing sectors have also recovered to or even exceeded the record of August 2022.

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On the stock exchange, indices and liquidity kept on recovering. The primary corporate bond market also presented several encouraging indications.

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On the downside, inflationary pressure increased rapidly in August following gasoline and rice prices.

Exchange rate pressure has been on rise, in the context of the opposite direction between interest rate policies of FED and SBV. As of August 30, 2023, the USD/VND exchange rate has increased by 2.47% YTD. High exchange rate pressure may leave SBV a little bit room to further reduce base interest rates in coming months.

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Export orders and domestic consumption are expected to keep rising by an usual growth pace of the year-end season, but global demand basically will likely remain weak. Especially, the export outlook to China may reverse or the recovery momentum may stagnate, as this nation has encountered a high risk of recession.