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
5
Chapter 1: Economic Outlook
7
SWOT Analysis
7
BMI Economic Risk Index
7
Economic Growth Outlook
8
Economy To Remain On A Strong Growth Path
8
GDP By Expenditure Outlook
9
TABLE: GDP GROWTH FORECASTS
9
TABLE: PRIVATE CONSUMPTION FORECASTS
9
TABLE: GOVERNMENT CONSUMPTION FORECASTS
10
TABLE: FIXED INVESTMENT FORECASTS
10
TABLE: NET EXPORTS FORECASTS
10
Fiscal And Public Debt Outlook
10
Bond Yields To Head Higher Amid Mounting Fiscal, Currency Risks
10
Structural Fiscal Position
12
TABLE: MAIN REVENUE AND EXPENDITURE CATEGORIES
12
Currency Forecast
13
VND: More Depreciation On The Cards As External Headwinds Mount
13
TABLE: CURRENCY FORECAST
13
Outlook On External Position
15
TABLE: MAIN EXPORT AND IMPORT PARTNERS
15
TABLE: MAIN EXPORTS AND IMPORTS
15
Monetary Policy
16
Central Bank Will Likely Refrain From Easing Too Aggressively
16
Monetary Policy Framework
17
Chapter 2: 10-Year Forecast
19
The Vietnamese Economy To 2025
19
A New Focus On Quality Growth
19
TABLE: LONG-TERM MACROECONOMIC FORECASTS
19
Chapter 3: Political Outlook
23
SWOT Analysis
23
BMI Political Risk Index
23
Domestic Politics
24
Upcoming Leadership To Stay The Course
24
TABLE: POLITICAL OVERVIEW
24
Long-Term Political Outlook
25
Key Political Challenges Over The Coming Decade
25
Chapter 4: Operational Risk
29
SWOT Analysis
29
Operational Risk Index
29
Operational Risk
30
TABLE: OPERATIONAL RISK
30
Trade Procedures And Governance
31
TABLE: IMPORT AND EXPORT DOCUMENT REQUIREMENTS
31
TABLE: TRADE PROCEDURES BREAKDOWN
31
TABLE: ASIA - TRADE PROCEDURES AND GOVERNANCE RISK
32
Vulnerability To Crime
33
Chapter 5: BMI Global Macro Outlook
37
Global Macro Outlook
37
Downside Risks Gather Momentum
37
TABLE: GLOBAL ASSUMPTIONS
37
TABLE: DEVELOPED STATES, REAL GDP GROWTH, %
38
TABLE: BMI VERSUS BLOOMBERG CONSENSUS REAL GDP GROWTH FORECASTS, %
38
TABLE: EMERGING MARKETS, REAL GDP GROWTH, %
39
TABLE: MACROECONOMIC DATA & FORECASTS
41

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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