Cashew processed for export. The manufacturing sector and international trade are showing signs of recovery, which is driving economic growth this year. — VNA/VNS Photo Hồng Nhung

HÀ NỘI — Vietnamese economy is forecast to expand at 5.5 per cent in the first quarter of the year as manufacturing and trade regain momentum, according to the United Overseas Bank Limited (UOB).

Suan Teck Kin, Head of UOB’s Research, Executive Director, Global Economics and Markets Research, was quoted by vneconomy.vn as saying that the manufacturing sector and international trade are showing signs of recovery. “We expect this pace to be sustained, especially in the second half of 2024, as the recovery in the semiconductor industry is firmer and global central banks are starting to operate more appropriate interest rate policies.

The drops in industrial production and export in February were because Tết holidays fell in the early days of the month. Production and business are returning to normal operation.

In the first two months, export totalled $58 billion, up 17.6 per cent against the same period last year. Import was up 17.7 per cent to reach $54.4 billion.

Industrial production grew by 5.7 per cent, very positive, while the same period of last year saw a drop of 2.2 per cent. Notably, the electronic components rose by 10.1 per cent, compared to 0.7 per cent a year ago.

The Manufacturing Purchasing Managers' Index remains above the 50.0 no change mark with both output and new orders up for the second month straight.

UOB forecast the Vietnamese economy would expand at 6 per cent in 2024, meeting the target set at 6-6.5 per cent.

Inflation is projected at 3.8 per cent.

Regarding interest rate polices, UOB said that after a period of continuous rate cuts in 2023 with the economic recovery, the possibility of further interest rate cuts has decreased. It is likely that the State Bank of Việt Nam will keep the refinancing rate at the current level of 4.5 per cent. — VNS