Vietnam Country Risk Report

Providing comprehensive data and in-depth analysis of political, financial and economic risk.

Report includes: BMI's Core Views, 10-year Forecasts, BMI's Economic Risk Index, Political Stability and Risk Index, Long-term Political Outlook, Operational Risk Index, SWOT Analysis and Structural Economic Sections

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  • Understand and measure the political, business environment and operational risks to your company
  • Gain insight on emerging trends that could support, strengthen or disrupt your activities in the market
  • Benefit from 10-year macroeconomic forecasts and insight into the structural characteristics of the economy
  • Get the long-term political outlook and explore possible scenarios for change
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Vietnam Country Risk Report
Product Price
$1,195.00

Core Views

  • The low inflationary environment in Vietnam (we forecast CPI to average just 2.1% in 2016) will provide ample room for the State Bank of Vietnam (SBV) to ease its monetary policy, but we expect apprehension regarding foreign exchange stability and strong economic growth momentum to temper the central bank's easing bias. As such, we forecast the monetary authority to cut its policy rate by a relatively shallow 50bps to 6.00% by end-2016.

  • Despite the ousting of pro-reform Nguyen Tan Dung, and the reappointment of conservative Nguyen Phu Trong to the General Secretary position during the CPV's 12th National Party Congress, we believe that the upcoming leadership is unlikely to make dramatic changes to existing policies that have propelled Vietnam's rapid economic growth over the past few years. More importantly, the injection of new blood into the party will likely sustain crucial market reforms over the coming years, which will allow Vietnam to stay on course with its strong growth trajectory.

  • The combination of a still strong export performance despite broad regional economic weakness, growing foreign investment interest, and robust domestic demand will continue to drive Vietnamese economic activity in 2016. As such, we maintain our forecast for Vietnam's real GDP growth to come in at 6.6% in 2016 (from 6.7% in 2015), which would make Vietnam one of the fastest growing economies in Asia. In particular, the country's manufacturing and real estate sectors will continue to benefit from greater foreign interest.

Major Forecast Changes

  • Vietnamese local currency government bond yields are likely to head higher over the coming months due to elevated levels of public debt, high fiscal deficit, and rising currency risks. Meanwhile, we have also revised our forecast for Vietnam's budget deficit as a share of GDP to come in at 5.3% (from 4.9% previously) in 2016, as we expect expenditure growth to outpace revenue in the coming year.

  • We expect the State Bank of Vietnam (SBV) to weaken its dong reference rate over the coming months as external headwinds increasingly weigh on the currency. Although strong economic growth prospects, capital controls, and a low inflationary environment will provide some support for the currency, we believe that it will be insufficient to stem capital outflows. As such, we forecast the Vietnamese dong to weaken to VND23,100/USD by end-2016, and VND24,000/USD by end-2017.

Key Risks To Outlook

  • The potential for renewed maritime dispute with China poses downside risks to our 2016 real GDP growth forecast of 6.6%.

  • Should the US economic recovery hit a standstill, this would pose a salient risk to Vietnam's export sector, and consequently our economic growth forecast, given the sector's strong orientation to the US economy.

Macroeconomic Forecasts (Vietnam 2014-2017)
Indicator 2014 2015e 2016f 2017f
e/f = BMI estimate/forecast. Source: National Sources/BMI
Real GDP growth, % y-o-y 6.0 6.7 6.6 6.4
Nominal GDP, USDbn 185.8 193.1 201.3 217.4
Consumer price inflation, % y-o-y, eop 4.1 0.5 3.6 4.9
Exchange rate VND/USD, eop 21,388.00 22,485.00 23,300.00 24,000.00
Budget balance, % of GDP -4.4 -5.0 -4.9 -4.7
Current account balance, % of GDP 4.9 1.1 0.1 -0.5
Executive Summary
5
Core Views
5
Major Forecast Changes
5
Key Risks To Outlook
5
Chapter 1: Political Outlook
7
SWOT Analysis
7
BMI Political Risk Index
7
Domestic Politics
8
Party Leadership Renewal To Bolster Economic Momentum
8
TABLE: Political Ove rvie w
8
Long-Term Political Outlook
9
Key Political Challenges Over The Coming Decade
9
Chapter 2: Economic Outlook
13
SWOT Analysis
13
BMI Economic Risk Index
13
Economic Activity
14
Maintaining A Strong Growth Trajectory
14
TABLE: Economic Activit y
14
Fiscal Policy
15
Fiscal Position To Remain Precarious
15
TABLE: Fiscal Polic y
15
Monetary Policy
17
Benign Inflation To Allow For Lower Interest Rates
17
TABLE: Monetary Policy
17
Exchange Rate Forecast
18
VND Stability Amid Positive Growth Outlook
18
TABLE: CURR ENCY FOR ECAST
18
TABLE: Current Acc ount
19
Chapter 3: 10-Year Forecast
21
The Vietnamese Economy To 2024
21
2015-2024: A New Focus On Quality Growth
21
table : Long -Term Macroec onomic Forecasts
21
Chapter 4: Operational Risk
25
SWOT Analysis
25
Operational Risk Index
25
Operational Risk
26
table : Operational Risk
26
Market Size And Utilities
27
TABLE: Asia - Market Size & Utilities Risk
28
International Security Risk
31
TABLE: Asia - Interstate Security Risk
32
Chapter 5: Key Sectors
35
Pharmaceuticals & Healthcare
35
TABLE: Pharmaceutical Sales, Historical Data & Forecasts
36
Telecommunications
37
TABLE: Healthcare Expenditure Trends , Historical Data & Forecasts
38
TABLE: Telecoms Sector - Historical Data & Forecasts
40
Other Key Sectors
43
table : Oil & Gas Sector Key Indicators
43
table : Defence & Security Sector Key Indicators
43
table : Infrastructure Sector Key Indicators
43
table : Food & Drink Sector Key Indicators
44
table : Autos Sector Key Indicators
44
table : Freight Key Indicators
44
Chapter 6: BMI Global Macro Outlook
45
Global Outlook
45
Assessing The Aftermath Of Three Key Events
45
Table : Global Assumptions
45
Table : Developed States, Real GDP Growth, %
46
Table : BMI VERSUS BLOO MBERG CONSENSUS REAL GDP GROW TH FOR ECASTS, %
46
Table : Eme rging Markets , Real GDP Growth, %
47

Assess your risk exposure in Vietnam with our 100% independent forecasts assessing the pace and stability of this key market. Backed by trusted data from BMI Research's 52 million data point economic forecast model, this report will allow you to measure political, economic, business environment and operational risks in Vietnam with confidence.

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