Inflation in the U.S. has exceeded expectations; however, core inflation remains far from the target. Despite this, FED has officially cut interest rates by 50 basis points, marking the beginning of a policy easing phase, with expectations of an additional 50 basis points cut in the remainder of 2024. The U.S. Manufacturing PMI has weakened significantly, while the Services PMI indicates substantial growth.
China's manufacturing sector has shown slight improvement, but the real estate market is facing major challenges despite government efforts. The European manufacturing sector continues to decline, with new orders and business confidence falling sharply. Japan's manufacturing economy shows signs of stabilization as output has rebounded, and new orders have slightly decreased.
Typhoon Yagi has caused significant damage to Vietnam's economy, with total estimated losses of approximately VND 40,000 billion. Consequently, UOB revised Vietnam's GDP forecast, lowering it by 0.15% compared to previous estimates. In contrast, ADB maintained its original forecast without adjustment.
In August 2024, the CPI increased by 3.45% YoY, while core inflation rose by 2.71%. Core inflation grew at a lower rate than the average CPI increase over the first eight months (4.04%), mainly because the prices of food, electricity, education, healthcare services, and fuel were key drivers of the CPI rise, but these items are excluded from the basket used to calculate core.
Credit growth has returned to positive momentum after a decline in July. Toward the end of the year, the recovery in the real estate sector is expected to drive loan demand. Additionally, favorable indicators from the manufacturing and retail sectors will continue to boost capital demand for the remainder of the year.
The overnight interest rate in August 2024 remained relatively stable compared to the previous month, fluctuating between 4.02% and 4.93%. The state-owned banks have maintained their average deposit rates at record low levels with little fluctuation during the period. In contrast, the joint-stock commercial banks have raised their deposit rates across different terms, reflecting a recovery in credit growth.
In 08/2024, the trade surplus is estimated at 4.53 billion USD. In August 2024, production in Vietnam continued to expand in terms of output and new orders, although the growth rate slowed compared to the record levels in July. The Industrial Production Index continued to grow strongly, with the manufacturing sector increasing by 10.6%.

The government continues to auction bonds, but the absorption capacity of the primary market remains low. The nominal interest rate in July 2024 is recorded at 2.7%, showing a slight increase compared to the previous month. The auction yield are fluctuating at a higher level than the nominal interest rates by 0.1% to 0.2%
The trading volume in July 2024 slightly decreased compared to the previous month but still showed robust growth year-over-year, reaching over 145 trillion VND. The yield on 5-10 year bonds increased from 2.4% at the beginning of the year to 3.1% in June 2024. However, in July 2024, it recorded a slight decrease to 2.9%.
The issuance value in July slightly decreased compared to the previous month but still remained significantly higher than in the first five months of the year, with most being issued by financial institutions. This issuance trend can be partly explained by financial institutions actively raising medium and long-term funds to balance their short-term capital for medium and long-term lending ratio.
In July 2024, a bond issuance from Da Nang Information Technology Park Development JSC was recorded with a 0% coupon rate. Other bond issuances continue to range from 9.8% to 12%, maintaining an average rate of slightly above 10%. Conversely, a slight increase has been observed for financial institutions, with the average rate rising from 5.6% to 6.1%. We anticipate that coupon rates for financial institutions' bonds will continue to see a modest increase in the near term due to the demand for medium and long-term capital as credit conditions recover.
In July, financial institutions actively repurchased bonds with coupon rates ranging from 4% to 7.6%. The total value of bonds maturing in the last two quarters of the year exceeds 112 trillion VND, with real estate bonds accounting for 39% of this amount, totaling over 43 trillion VND."

Confidence in the manufacturing and services sectors in the U.S. remains optimistic. While input costs continue to rise, selling prices are being kept at competitive levels. Inflation in the U.S. for July met expectations, increasing the likelihood of the Fed reducing interest rates for the first time in September 2024. In contrast, business confidence in China's service sector is showing signs of decline, but the manufacturing sector remains positive.
Vietnam's GDP growth in Q2/2024 was impressive, reaching 6.93% YoY; the first half of 2024 saw a 6.42% increase, just slightly below the 6.58% growth in the same period of 2022 (2020-2024). Current forecasts place Vietnam's GDP growth at an average of 6% for the year.
CPI in July 2024 increased by 0.48% MoM. On average, the CPI for the first seven months of 2024 rose by 4.12% YoY, driven mainly by rising costs in the transportation sector.
As of June 30th, credit growth reached 6% compared to the end of 2023, equivalent to over VND 800 trillion, meeting the government's target (June alone saw a 3.6% increase, equivalent to VND 480 trillion). However, there is significant divergence among banks in terms of credit growth. The State Bank of Vietnam may consider adjusting credit growth quotas more appropriately, allowing banks with strong credit expansion to continue their momentum.
Overnight interest rates in July 2024 increased to 4.43% - 4.98%, up from 2.8% - 4.5% in June 2024. Deposit interest rates at commercial banks are also slightly increasing for short-term deposits under 13 months, with noticeable differentiation among banks.
July 2024 is estimated to have a trade surplus of USD 2.12 billion. The first seven months of 2024 saw significant growth in products such as cashews, coffee, rice, wood, and wood products, with YoY increases ranging from 20-30%.
The Manufacturing PMI remained stable at 54.7 in July, indicating that business conditions continue to improve significantly. We forecast GDP growth for 2024 to be around 6 - 6.5%, with inflation hovering around 4%.