According to the UK-based bank, rising inflation reduces the likelihood of further interest rate cuts.

Standard Chartered Slightly Lowers Vietnam’s Growth at 6.5% in 2021
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Standard Chartered continues to expect Vietnam’s strong growth this year and next, with forecast for 2021 at 6.5%, slightly lowered from the previous forecast of 6.7%. The Bank maintains its 7.3% growth forecast for 2022, continuing to expect a post-COVID economic acceleration. The current COVID outbreak may pose downside risks to the forecast.
“We believe Vietnam is moving towards its goal of becoming a regional supply-chain hub, a modern industrial economy and a high-income country in the future. Vietnam managed the COVID situation well in 2020, further enhancing its appeal to foreign investors; the country had already benefited from the ongoing supply-chain shift in recent years. In the near term, the country’s pandemic management will be crucial to the outlook.” said Tim Leelahaphan, Economist for Thailand and Vietnam, Standard Chartered. 
Standard Chartered’s economists anticipate domestically oriented sectors such as retail sales are likely to be the hardest-hit if the current COVID wave persists. The focus now is on whether the impact on the industrial sector will be temporary or more long-lasting. While the global pandemic has weighed on Vietnam’s economy via reduced tourism, supply-chain disruptions and weaker overseas demand, external indicators are showing a strong recovery. H1 exports rose 28.4% y/y and imports rose 36.1%. 
According to the UK-based bank, rising inflation reduces the likelihood of further interest rate cuts. The Bank does not expect rate hikes despite improving economic and credit growth since Q4-2020. It also expects the State Bank of Vietnam (SBV) to keep its refinancing rate at 4.0% through end-2023 to support credit growth. The possibility of a rate hike may gradually emerge if inflation and growth accelerate faster than expected. 
Standard Chartered has recently lowered its USD-VND forecasts to 22,900 at end Q3-2021 (from 23,100) and to 22,850 at end-2021 (23,000). Its end-2022 forecast remains unchanged at 22,500. The balance of payments remains highly supportive of the currency, with strong exports and high net FDI inflows.