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

  • Vietnam completed its leadership transition on April 9 2016, and we expect the new government to maintain its strategic non-alignment foreign policy. In the latest maritime dispute between China and Vietnam, the new administration adopted an unyielding tone against Beijing, suggesting that it will not be subservient to its larger neighbour. However, we expect Hanoi to seek to maintain a delicate balance as it attempts to appease Vietnamese at home, while preserving crucial economic relations with China.

  • We forecast the SBV to embark upon on a relatively shallow rate-cutting cycle of 50bps over the course of the year in order to reduce lending rates and provide support to the economy. The low inflationary environment (we forecast CPI to average 2.1% in 2016) will also provide sufficient room for the central bank to act. However, still-strong economic growth momentum and concerns over external stability will likely moderate the central bank's easing bias.

  • The strong orientation of Vietnamese exports to the US and steady inflows of foreign direct investment should sustain Vietnam's export growth over the coming quarters. However, we expect import growth to remain similarly strong as the country relies heavily on imported input material sfor production. As such, we expect Vietnam's trade deficit to widen further to 3.2% of GDP in 2016, from an estimated 2.1% of GDP in 2015.

Major Forecast Changes

  • We believe that Vietnam's industrial and services sectors will continue to benefit from a resilient export sector, strong foreign investor interest and robust domestic demand. However, extreme weather conditions and subdued oil prices will continue to act as a drag on the economy, capping its short-term growth potential. As such, we have downgraded Vietnam's real GDP growth forecast for 2016 to 6.3%, from 6.6% previously.

  • Although we forecast Vietnam's budget deficit as a share of GDP to narrow over the coming years, progress will be slow, as unrealistic fiscal projections, low oil revenue, an increase in current expenditure, and high debt repayment costs will impede the government's efforts to consolidate its fiscal position over the near-term. Accordingly, we forecast Vietnam's budget deficit as a share of GDP to come in at 6.0% in 2016, marking little change from the 6.1% recorded in 2015.

Key Risks

  • The potential for renewed maritime dispute with China poses downside risks to Vietnam's otherwise stable short-term political outlook.

  • Should the US economic recovery falters, 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 6.3 6.4
Nominal GDP, USDbn 185.8 191.5 198.9 214.9
Consumer price inflation, % y-o-y, eop 4.1 0.6 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 -6.1 -6.0 -5.6
Current account balance, % of GDP 4.9 1.1 0.1 -0.6
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
Poor Weather Conditions To Weigh On Growth
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
Fiscal Deficit To Remain Wide in 2016
10
Structural Fiscal Position
12
TABLE: MAIN REVENUE AND EXPENDITURE CATEGORIES
12
External Trade And Investment Outlook
13
Trade Balance To Deteriorate Despite Strong Exports
13
Outlook On External Position
14
Monetary Policy
15
Shallow Rate Cuts On The Table
15
TABLE: MAIN EXPORT AND IMPORT PARTNERS
15
TABLE: MAIN EXPORTS AND IMPORTS
15
TABLE: CAPITAL & FINANCIAL ACCOUNT BALANCE
15
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
Hanoi To Maintain Foreign Policy Bearing
24
TABLE: POLITICAL OVERVIEW
24
Long-Term Political Outlook
25
Long-Term Political Outlook - 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
Economic Openness
31
TABLE: TOP FIVE IMPORT PRODUCTS & IMPORT PARTNERS, 2009 - 2013, USDMN
31
TABLE: FREE TRADE AGREEMENTS
32
TABLE: FREE TRADE ZONES AND INVESTMENT INCENTIVES
33
Availability Of Labour
36
TABLE: ASIA - AVAILABILITY OF LABOUR RISK
36
TABLE: LABOUR FORCE EMPLOYMENT BY SECTOR ('000), 2007-2012
37
TABLE: TOP 10 SOURCE COUNTRIES FOR MIGRANT WORKERS, '000
38
Chapter 5: BMI Global Macro Outlook
41
Global Macro Outlook
41
Tentative Stability, But New Risks Emerging
41
TABLE: GLOBAL ASSUMPTIONS
41
TABLE: DEVELOPED STATES, REAL GDP GROWTH, %
42
TABLE: EMERGING MARKETS, REAL GDP GROWTH, %
43
TABLE: MACROECONOMIC DATA & FORECASTS
45

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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