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 PCA's ruling on the Philippine arbitration case on July 12 will have wider implications for other claimant countries in the South China Sea, particularly Vietnam, as the conclusions that were drawn will help to set legal precedent for similar maritime disputes in the region. We believe that Vietnam will likely stand to benefit vis-a-vis China by using the ruling to clinch concessions from Beijing as a counterbalance to nationalist domestic sentiment.

  • We maintain our expectations for the SBV to lower its benchmark refinancing rate by a relatively shallow 50 bps to 6.00% by the end-2016 as a disappointing GDP growth figure in Q116, subdued inflationary pressures, and a relatively stable currency will provide impetus for the central bank to act. However, concerns over reigniting the housing bubble will likely temper the bank's easing bent.

  • We maintain our expectations for Vietnam's fiscal deficit to remain largely unchanged at 6.1%of GDP in 2016, due to high recurrent expenditure and debt repayment costs, as well as low oil-related revenue. Beyond 2016, we forecast a gradual improvement in the government's fiscal position owing to strong economic growth and reform efforts by the government. However, we note that contingent liabilities and slow reform momentum from the SOE and banking sectors could pose downside risks to fiscal consolidation efforts and public debt sustainability.

Major Forecast Changes

  • Due to a weaker-than-expected GDP growth performance in H116, we have downgraded Vietnam's growth forecast to 5.9%, from 6.3% previously. However, we expect growth to accelerate over the coming quarters spurred by a recovery in agricultural output, as well as robust growth in the industrial and services sectors.

  • We expect the Vietnamese dong to maintain its long-term depreciatory trajectory against the US dollar as inflation is likely to average higher than the US, and the income account deficit is likely to remain wide, acting as a persistent drag on the currency. However, we believe that dong weakness over the shorter-term is likely to be tempered by delays in Fed rate hikes and regional FX strength. Accordingly, we have upgraded our forecast for the dong to reach VND22,600 by end-2016, and VND23,200 by end-2017, versus our previous forecast of VND23,300/USD and VND24,000/USD, respectively.

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 5.9 6.4
Nominal GDP, USDbn 185.8 191.5 202.5 221.0
Consumer price inflation, % y-o-y, eop 1.8 0.6 3.6 4.9
Exchange rate VND/USD, eop 21,388.00 22,485.00 22,600.00 23,200.00
Budget balance, % of GDP -4.4 -6.1 -6.1 -5.9
Current account balance, % of GDP 4.9 1.1 -0.2 -0.8
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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