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Macroeconomics Report - Feb 2025: HIGH TARGETS IN UNCERTAIN CONDITIONS

The economy started the year relatively smoothly, although it has not made a breakthrough. Specifically, seasonal factors affected production activities but maintained growth momentum, while exports remained positive. Meanwhile, consumption continued to improve, but the rate of improvement was not strong despite falling into the peak consumption season of Tet.

When looking at economic sectors, business confidence showed signs of improvement in the foreign sector while the domestic sector has not yet shown clear improvement.

The trade war has been the focus of the international market in the past month. Vietnam is still in a wait-and-see mode. However, we still maintain the baseline scenario that the US only imposes tariffs or increases trade defense measures on some Vietnamese products, such as aluminum and steel.

The exchange rate was generally controlled in January 2025, but pressure increased after Tet. The pressure on the USD/VND exchange rate will gradually increase towards the end of Q1/2025 as the USD remains strong and foreign currency demand increases in the coming time.

In the monetary market, the SBV has been net injecting money in the past month to support liquidity during the peak period of VND demand. At the same time, positive credit growth in early 2025 could also put pressure on the system's liquidity and push interest rates in the interbank market to high levels.

The government has planned to adjust the 2025 growth target to 8%, with the driving force needing public investment and credit. However, we maintain this year's growth forecast at 6.8%, waiting for further developments on these driving forces in the following months.